ASIATODAY.ID, MANILA — Escalating tensions in the Middle East are beginning to shake the economic foundations of Asia and the Pacific. The Asian Development Bank (ADB) projects regional growth will slow to 5.1% in both 2026 and 2027, down from 5.4% last year.
In its latest Asian Development Outlook (ADO) April 2026, ADB warns that prolonged geopolitical instability is now the single biggest threat to the region’s economic trajectory. Rising energy and food prices, supply chain disruptions, and financial market volatility are expected to ripple across economies.
“A prolonged conflict in the Middle East is the most significant risk to the outlook. It could sustain high energy and food prices while tightening global financial conditions,” said ADB Chief Economist Albert Park on April 10, 2026.
Despite mounting pressures, the region is not without resilience. Strong domestic demand, relatively stable labor markets, and increased public infrastructure spending continue to support economic activity.
However, inflationary pressures are building. Regional inflation is forecast to rise to 3.6% in 2026, before easing slightly to 3.4% in 2027. Energy price spikes linked to the conflict could also spill over into global food markets, particularly through disruptions in fertilizer supply.
Growth is expected to moderate across most economies. China is projected to expand by 4.6% in 2026 amid property sector weakness and slowing exports. India remains comparatively resilient, with growth forecast at 6.9%, supported by strong domestic consumption. Meanwhile, Pacific economies are set to experience the sharpest slowdown.
ADB also highlights downside risks. A prolonged and escalating conflict could further disrupt trade flows, strain global logistics, and heighten financial instability.
In this climate of heightened uncertainty, ADB underscores the need for sound macroeconomic policies and targeted support for vulnerable populations to safeguard growth.
As global tensions intensify, one reality is becoming increasingly clear: geopolitical conflict is no longer a distant concern—it is a direct and growing threat to Asia’s economic stability. (AT Network)
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