Islamabad (HRNW)- The Asian Development Bank (ADB) has lowered its economic growth forecast for developing Asia and the Pacific to 4.9 percent in 2026 from 5.5 percent in 2025, down 0.2 percentage points from its April forecast.
According to the Asian Development Outlook for July 2026, the prolonged disruptions in global energy markets due to the Middle East conflict have weighed on the region’s economic performance more than expected. However, the growth forecast for 2027 has been maintained at 5.1 percent, as economic activity is expected to recover as these pressures gradually ease.
According to the report, despite the framework agreement reached in June, disruptions in global energy markets are expected to gradually ease. Inflationary pressures are likely to increase as the impact on energy, fertilizers, other raw materials and supply chains continues.
Inflation in the region is projected to be 4.3 percent in 2026, up from 3 percent in 2025. This is 0.7 percentage points higher than the April estimate, while inflation for 2027 is maintained at 3.4 percent.
ADB Chief Economist Albert Park said that if the framework agreement is implemented sustainably, it could help restore normality in global energy markets, but the pace of this process is uncertain and there are significant downside risks.
According to him, economic growth in developing Asia and the Pacific remains strong, but the ongoing pressure from conflict will require governments to adopt a balanced policy between promoting economic growth and controlling inflation.
The report warns that if the conflict escalates again or geopolitical uncertainty persists, it could further destabilize energy markets, raise the cost of risk, and increase inflation and external pressures.
In addition, tightening global financial conditions, rising sovereign bond yields, rising borrowing costs, fiscal deficits in several economies, high tariffs, trade policy uncertainty, and rising fertilizer prices are also cited as risks to the region’s economy, agricultural production, and food security.
According to the report, growth estimates for most subregions except emerging East Asia have been revised down for 2026, while growth estimates for China for 2026 and 2027 have been maintained at 4.6 and 4.5 percent, respectively, due to strong exports and infrastructure investment.
India’s growth forecast for 2026 has been lowered to 6.6% as rising energy prices have weighed on domestic demand, while the forecast for 2027 has been maintained at 7.3%.
Growth estimates for Southeast Asia and the Pacific have also been lowered, citing weak domestic demand, sluggish tourism, rising inflation and rising import costs.
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