Asian Development Bank cuts 2026 growth forecast for developing Asia to 4.9%

The Asian Development Bank has lowered its 2026 growth forecast for developing Asia and the Pacific to 4.9%, citing the impact of the Middle East crisis on energy markets, supply chains and production costs.

The latest projection is below the bank’s 5.1% forecast issued in April, but higher than the 4.7% estimate released in late April.

In an update to its Asian Development Outlook report on Wednesday, the ADB said the Middle East conflict had prolonged disruption to energy and supply chains, raising production costs and weighing on economic activity.

For 2027, the Manila-based lender raised its growth forecast to 5.1%, matching its April estimate and up from 4.8% projected in late April.

Developing Asia and the Pacific includes 43 economies, ranging from China and India to Georgia and Samoa. It excludes Australia, Japan, New Zealand, Singapore and South Korea.

The ADB also warned of downside risks, including renewed escalation of the Middle East conflict, prolonged energy market uncertainty, tighter global financial conditions, repricing of artificial intelligence-related stocks and a deeper property downturn in China.

The lender projected growth of 4.6% in East Asia, 6.0% in South Asia and 4.6% in Southeast Asia for 2026. These forecasts were raised from the late-April estimates of 4.4% for East Asia, 5.7% for South Asia and 4.2% for Southeast Asia.

Regional inflation is expected to rise to 4.6% this year, compared with the ADB’s April forecast of 3.6%, though lower than its late-April projection of 5.2%. Inflation is expected to ease to 3.4% in 2027.