Asian Development Bank warns Mideast conflict may hit regional growth

The conflict in the Middle East has amplified global geopolitical risks and intensified downside risks for the economic growth of developing Asia and the Pacific, according to a new report released by the Asian Development Bank (ADB) on Friday.

The Asian Development Outlook April 2026 projected that under an early stabilization scenario, regional growth of developing Asia and the Pacific is expected to moderate to 5.1% in both 2026 and 2027, from 5.4% in 2025.

However, if disruptions in the Middle East last through the third quarter of 2026, the growth could slow to 4.7% in 2026 and 4.8% in 2027.

Albert Park, the ADB's chief economist, said higher energy prices will raise production costs and consumer prices, while export growth will normalize following last year's front-loading ahead of US tariff increases. He warned that more persistent disruptions would make the inflation situation even worse and weigh further on growth across the region.

According to the ADB's forecast, under the early stabilization scenario, inflation is projected at 3.6% in 2026 and 3.4% in 2027, up from 3% in 2025. However, if tensions in the Middle East last through the third quarter of 2026, inflation would rise to 5.6% this year.

The report noted that despite having only modest direct trade exposure to Middle Eastern economies, developing Asia and the Pacific is highly vulnerable to spillovers transmitted through global energy markets, trade and transport networks, and financial conditions.

(Cover: A view of an apartment building after an Israeli air strike in Lebanon, Beirut, April 9, 2026. /VCG)