The Asian Development Bank (ADB) trimmed its 2026 economic growth forecast for developing Asia and the Pacific to 4.9%, down from the 5.1% projected in April but up from a 4.7% estimate in a special update earlier this year. The revision followed lower oil prices and easing supply disruptions since the height of the Middle East conflict that has disrupted energy markets and supply chains, raising production costs and weighing on regional activity more than initially expected [1, 2, 3, 4, 5].
ADB warned that risks to the outlook remain high, including renewed escalation of the Middle East war, prolonged energy market uncertainty, tighter financial conditions, and a deeper property downturn in China. The bank also highlighted potential food price pressures from disruptions to shipping routes and adverse weather events such as El Niño impacting agriculture and trade flows [2, 3, 4, 5].
Inflation in developing Asia is forecast at 4.3% in 2026, down from 5.2% predicted in April but still above the 3.6% projected in the April regular outlook. The bank expects inflation to ease further to 3.4% in 2027 [2, 3, 4, 5].
The ADB kept its 2027 growth forecast for developing Asia unchanged at 5.1% [1]. Meanwhile, it raised the growth forecast for advanced Asian economies including South Korea, Taiwan, Japan, and Singapore to 2.6% from 2.2%. This boost reflects strong external demand for electronics and machinery driven by artificial intelligence (AI) investment [2, 3, 4, 5].
Albert Park, ADB Chief Economist, said, "We are overall bullish on the AI movement. Eventually we should start to see higher productivity growth for economies that start to adapt AI more broadly." He added, "Strong demand for semiconductors tied to AI investment has helped cushion the impact of higher energy prices, particularly in advanced Asian economies such as Taiwan, China, South Korea and Hong Kong" [2, 5].
The ADB advised governments to avoid fossil fuel subsidies to bolster fiscal resilience while maintaining incentives for energy conservation [3, 4].
In April 2026, the ADB had forecast 5.1% growth and 5.2% inflation for the region in its regular Asian Development Outlook report. The special update midyear had lowered that growth forecast to 4.7% amid conflict-related disruptions. The latest update on or before August 6 raised the 2026 growth forecast to 4.9% reflecting improving conditions [1, 2, 3, 4, 5].
