The Asian Development Bank (ADB) has lowered its growth forecast for developing Asia and the Pacific economies to 4.9 percent for 2026 compared to 5.5 percent growth in 2025. This is a reduction of 0.2 percentage points from April projections. Prolonged disruptions to energy markets caused by the Middle East conflict have weighed more heavily on the region’s prospects than anticipated, according to ADB’s latest economic outlook released today. The 2027 growth forecast is maintained at 5.1 percent, reflecting recovering activity as these pressures ease.
Asian Development Outlook (ADO) July 2026 expects disruptions to global energy markets to unwind only gradually, despite a framework agreement signed in June. With impacts extending beyond energy to fertilisers, other commodity prices, and supply chains, inflationary pressures are likely to persist. Regional inflation is now forecast at 4.3 percent this year compared to 3 percent in 2025—an upward revision of 0.7 percentage points from April. The inflation forecast for 2027 remains at 3.4 percent.
“Durable implementation of the framework agreement would help normalise global energy markets, but the pace of adjustment is highly uncertain with significant downside risks,” said ADB Chief Economist Albert Park. “Economic growth in developing Asia and the Pacific remains resilient, but persistent headwinds caused by the conflict require a careful policy balance between supporting growth and containing inflation.”
ADO July 2026 warns that renewed conflict escalation and prolonged geopolitical uncertainty remain key risks to the region’s outlook. These could further tighten energy markets, raise risk premia, and intensify inflationary and external pressures. Tighter global financial conditions pose additional risks, with sovereign bond yields and borrowing costs rising, and fiscal deficits projected to widen in several economies. Higher tariffs and elevated trade policy uncertainty could also weigh on activity, while rising fertiliser prices continue to threaten agricultural output and food security.
Growth projections for 2026 are lowered for most subregions, except developing East Asia. Forecasts for the People’s Republic of China are unchanged at 4.6 percent for 2026 and 4.5 percent for 2027, supported by strong exports and infrastructure investment. India’s growth forecast is revised down to 6.6 percent this year, as higher energy costs weigh on domestic demand, and maintained at 7.3 percent for next year. Growth projections for Southeast Asia and the Pacific are also trimmed, reflecting weaker domestic demand and tourism, rising inflation, and higher import costs.
ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.
