MANILA, July 9 (Xinhua) -- Prolonged disruptions to energy markets caused by the Middle East conflict have weighed more heavily on the Asia-Pacific region's prospects than anticipated, according to a report released by the Asian Development Bank (ADB) on Wednesday.
The Asian Development Outlook (ADO) July 2026 lowered its growth forecast for developing Asia and the Pacific economies to 4.9 percent for 2026, a reduction of 0.2 percentage points from the ADO April projection. While the growth projection for 2027 remains unchanged at 5.1 percent.
According to the ADB, despite a framework agreement being signed in June between the United States and Iran, impacts extend beyond energy to fertilizers, other commodity prices, and supply chains, and inflationary pressures are likely to persist.
Regional inflation is now forecast to increase from 3 percent in 2025 to 4.3 percent in 2026, an upward revision of 0.7 percentage points from the ADO April projection. The inflation forecast for 2027 remains at 3.4 percent.
The report noted that a renewed escalation of the conflict and prolonged geopolitical uncertainty remain the key risks facing the region's economic prospects. These factors could further tighten energy markets, push up risk premiums, and, in turn, amplify inflationary pressures and external vulnerabilities.
Additionally, the tightening of global financial conditions poses additional challenges: yields on sovereign bonds and financing costs are rising, and fiscal deficits are expected to widen further across many economies.
Higher tariffs and elevated trade policy uncertainty could also weigh on activity, while rising fertilizer prices continue to threaten agricultural output and food security, according to the report. ■