ADB cuts Asia-Pacific growth forecast to 4.9% for 2026 amid global energy market disruptions
New Delhi, July 9
The Asian Development Bank has lowered its economic growth forecast for developing economies in Asia and the Pacific to 4.9 per cent for 2026, down from the 5.5 per cent growth recorded in 2025. This downgrade represents a reduction of 0.2 percentage points from the projections released in April, according to the latest economic outlook from ADB.
Prolonged disruptions to global energy markets, driven by ongoing conflict in the Middle East, have weighed more heavily on the economic prospects of the region than previously anticipated.
The report, titled the Asian Development Outlook July 2026, noted that these market disruptions are expected to unwind only gradually despite a framework agreement signed in June. The economic fallout has expanded beyond energy sectors to impact fertilizers, commodity prices, and broader supply chains, which is keeping inflationary pressures elevated.
Consequently, regional inflation is now projected to hit 4.3 per cent this year, marking an upward revision of 0.7 percentage points from the April forecast.
"Durable implementation of the framework agreement would help normalize 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," Park added.
The report warned that any renewed escalation of conflict or prolonged geopolitical uncertainty could further tighten energy markets, increase risk premia, and intensify both inflationary and external pressures.
Furthermore, tighter global financial conditions are raising sovereign bond yields and borrowing costs, which is projected to widen fiscal deficits across several regional economies. Rising fertilizer prices also continue to threaten agricultural output and food security, while elevated trade policy uncertainty and higher tariffs pose additional risks to economic activity.
Growth projections for 2026 have been reduced for most subregions, with developing East Asia being the sole exception.
Projections for the People's Republic of China remain unchanged at 4.6 per cent for 2026 and 4.5 per cent for 2027, driven by infrastructure investment and strong exports.
Conversely, India's growth forecast was revised downward to 6.6 per cent for this year as higher energy costs dampened domestic demand, though its 2027 forecast is maintained at 7.3 per cent.
Growth outlooks for Southeast Asia and the Pacific were also trimmed due to weaker domestic demand, declining tourism, rising inflation, and escalating import costs.
Meanwhile, the growth forecast for 2027 across the broader region is maintained at 5.1 per cent, which reflects an expected recovery in economic activity as these compounding geopolitical and inflationary pressures begin to ease. The inflation forecast for 2027 is similarly expected to moderate to 3.4 per cent.
— ANI
Reader Comments
ADB's cuts are a wake-up call for India. Middle East tensions are affecting fertilizer prices, which could hit our farmers hard. The government needs to ensure food security measures are strengthened, not just focus on GDP numbers. 🚜🌾
Interesting to see China's projections unchanged at 4.6%. Their infrastructure spending seems to be working. India's 6.6% is good but could be better if we focus on domestic manufacturing and reduce import dependence. The global energy crisis isn't going away anytime soon.
I think the ADB is being conservative. India's digital economy and tech sector are booming despite global headwinds. The 7.3% for 2027 seems achievable if we maintain policy continuity. But yes, inflation is a serious concern - need to watch RBI's moves carefully. 📈
As someone working in the commodities sector, I can confirm the supply chain disruptions are real. Fertilizer prices have spiked 30% since January. The ADB's warning about food security is not alarmist - it's a genuine risk for South Asia. Governments need to act fast.
The ADB report highlights something we all feel - higher prices at the pump and in grocery stores. But I'm optimistic about India's resilience. Our domestic market is large, and services exports are growing. Just wish the government would invest more in renewable energy to shield us from oil shocks. ☀️💡
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