Middle East conflict to weigh on Asia-Pacific growth: ADB

By Zhang Xinglong

Manila (CNS) -- Economic growth in developing Asia and the Pacific is projected to slow to 5.1% in both 2026 and 2027, down from 5.4% in 2025, as the ongoing conflict in the Middle East and persistent trade uncertainty dampen the regional outlook, the Asian Development Bank (ADB) said on Friday.

In its latest Asian Development Outlook (ADO) April 2026, the ADB also forecast regional inflation to rise to 3.6% in 2026 and 3.4% in 2027, compared with 3.0% last year.

The projections were based on assumptions finalized on Friday under conditions of exceptionally high uncertainty, incorporating a scenario in which the Middle East conflict stabilizes early. However, more recent developments suggest disruptions may persist longer than initially expected.

“A prolonged conflict in the Middle East is the single biggest risk to the region’s outlook,” said ADB Chief Economist Albert Park. He warned that sustained geopolitical tensions could keep energy and food prices elevated while tightening global financial conditions.

Park added that renewed uncertainty in trade policies poses additional risks, underscoring the need for governments to maintain sound macroeconomic policies, sustain growth, and contain inflation, while implementing targeted support for vulnerable households.

The report includes scenario analyses showing that an escalation of the Middle East conflict could affect regional economies through multiple channels, including rising price pressures, shipping disruptions, and heightened financial market volatility.

Across major economies, growth prospects are expected to soften. India’s economy is projected to grow by 6.9% this year, easing from 7.6% in 2025, before rebounding to 7.3% in 2027 on the back of strong domestic consumption. Meanwhile, Pacific economies are expected to record the sharpest slowdown, with growth decelerating from 4.2% in 2025 to 3.4% in 2026 and 3.2% in 2027.