ADB Downgrades Asia Growth Forecast Amid Mideast Crisis
The Manila-based lender now forecasts regional economic growth at 4.7 percent in 2026 and 4.8 percent in 2027 — a significant retreat from the 5.1 percent projected for both years in its early April outlook. The downgrade reflects an updated assumption that the Middle East situation will take considerably longer to stabilize than previously anticipated.
Inflation across the region is expected to nearly double, accelerating to 5.2 percent this year from just 3 percent in 2025, before partially easing to 4.1 percent in 2027. That marks a steep climb from the ADB's earlier projections of 3.6 percent for 2026 and 3.4 percent for 2027.
Surging oil prices are central to the revised calculus. The ADB now assumes crude will average approximately 96 U.S. dollars per barrel in 2026, easing to around 80 dollars in 2027 — both substantially elevated compared to the pre-conflict benchmark of 69 dollars per barrel recorded in January and February.
The danger deepens under a worst-case scenario. Should the conflict escalate further and oil prices spike in May 2026 and remain elevated, regional growth could crater to 4.2 percent this year and just 4 percent in 2027, while inflation could soar to a damaging 7.4 percent in 2026.
Economies heavily reliant on imported fuel, remittances, tourism, or external financing face the steepest exposure, the bank cautioned. Critically, the ADB warned that disruptions to global energy and trade networks may prove structural rather than temporary — a long-lasting realignment, not merely a short-term shock.
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