Economic growth in developing Asia and the Pacific is expected to slow this year as the ongoing conflict in the Middle East disrupts trade and energy markets, the Asian Development Bank (ADB) said on Friday.
ADB President Masato Kanda described the situation as a “formidable test” for the region’s economic momentum, noting that the conflict has added fresh uncertainty to an already fragile global environment.
According to the ADB’s latest Asia Development Outlook, regional growth could ease to 4.7% in 2026, down from 5.4% last year, while inflation may rise to 5.6% from 3.0% in 2025 if hostilities persist through the third quarter.
The report also warns that if the conflict continues for a full year, the region could lose around 1.3 percentage points of growth across 2026 and 2027.
Developing Asia and the Pacific includes 43 economies, ranging from China and India to smaller nations such as Georgia and Samoa, but excludes advanced economies like Australia, Japan, New Zealand, Singapore, and South Korea.
These projections differ from the ADB’s baseline scenario finalised on March 10, which assumed a shorter, one-month conflict. Under that outlook, growth was expected to moderate only slightly to 5.1% in 2026 and 2027, with inflation rising to 3.6% this year before easing to 3.4% in 2027.
ADB Chief Economist Albert Park noted that prolonged disruptions to energy supplies remain a key risk. “The ceasefire appears fragile, and markets suggest a low probability that it will hold,” he said, warning that continued instability could further impact growth.
The conflict, which has significantly disrupted global energy flows, has driven up oil and gas prices and intensified inflationary pressures worldwide. The Strait of Hormuz—through which about one-fifth of global oil trade typically passes—has been particularly affected.
The ADB stressed that policymakers should focus on containing inflation and financial stress in the short term, while accelerating energy diversification and improving efficiency to reduce long-term vulnerabilities.