Asia-Pacific Growth to Slow Amid Middle East Conflict
- Economic growth in developing Asia and the Pacific is projected to slow to 5.1 per cent in 2026 and 2027, down from 5.4 per cent in 2025, according...
- The deceleration is primarily attributed to the ongoing US and Israeli war on Iran, which the ADB states is disrupting trade and energy markets.
- The ADB noted that while the direct exposure of developing Asia and the Pacific to the conflict is limited, the region remains vulnerable to rising prices for other...
Economic growth in developing Asia and the Pacific is projected to slow to 5.1 per cent in 2026 and 2027, down from 5.4 per cent in 2025, according to a report released by the Asian Development Bank (ADB) on April 10, 2026.
The deceleration is primarily attributed to the ongoing US and Israeli war on Iran, which the ADB states is disrupting trade and energy markets. The conflict is expected to impact various sectors across the region, including tourism and manufacturing.
Regional Economic Vulnerabilities
The ADB noted that while the direct exposure of developing Asia and the Pacific to the conflict is limited, the region remains vulnerable to rising prices for other commodities and energy. These factors are expected to drive inflation and lead to tighter financial conditions.
ADB President Masato Kanda
Developing Asia and the Pacific’s economic ascent faces a formidable test
The bank’s outlook suggests that even if oil prices stabilize in the coming months, the economic recovery for countries in the region could take several years. Under an early stabilization scenario, the regional growth is expected to remain at 5.1 per cent for both 2026 and 2027.
The report warns of further risks if the conflict persists. If the war in the Middle East continues for a full year, the region could lose approximately 1.3 percentage points of growth across 2026 and 2027.
Impact on Major Economies
The economic slowdown is reflected in the forecasts for the region’s largest economies. The ADB projects that China’s growth will ease to 4.6 per cent in 2026, compared to 5 per cent in 2025. This decline is linked to private consumption remaining subdued within the Chinese economy.
Separately, the World Bank has reported that growth in South Asia is also expected to slow to 6.3 per cent in 2026 due to the conflict in the Middle East.
Regional Scope
The ADB’s analysis of developing Asia and the Pacific covers 43 economies. This group includes major nations such as India and China, as well as Georgia and Samoa.
The designated region specifically excludes Japan, Australia, South Korea, New Zealand, and Singapore.