Asian Development Bank Warns Middle East Conflict Will Slow Asia-Pacific Growth

The Asian Development Bank warned that the Middle East conflict has intensified downside risks for economic growth in developing Asia and the Pacific.

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

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Regional growth is expected to moderate to 5.1 percent in both 2026 and 2027, down from 5.4 percent in 2025.

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If disruptions last through the third quarter of 2026, growth could slow to 4.7 percent in 2026 and 4.8 percent in 2027.

Inflation is projected at 3.6 percent in 2026 under early stabilization, but would rise to 5.6 percent if tensions last through Q3.

ADB Chief Economist Albert Park said, "Higher energy prices will raise production costs and consumer prices."

Developing Asia and the Pacific is highly vulnerable to spillovers transmitted through global energy markets, trade and transport networks, and financial conditions.

Growth in China is forecast to decline to 4.6 percent in 2026, down from 5 percent in 2025.

India is forecast to ease to 6.9 percent in 2026 from 7.6 percent in 2025.

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Economies in the Pacific are expected to experience the sharpest slowdown.

The Maldives is forecast to slow sharply to 1.0 percent in 2026, down from 5.4 percent in 2025.

Inflationary pressures are expected to hit the region hard.

The ADB emphasized that the current environment represents a major test for Asia's growth model.

“MANILA, PHILIPPINES (10 April 2026) — Economic growth in Maldives is expected to slow sharply in 2026 as the conflict in the Middle East weighs on tourism, energy prices, and fiscal and external buffers, according to the Asian Development Outlook (ADO) April 2026, released today by the Asian Development Bank (ADB)”

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Policymakers are being urged to prioritize inflation containment and financial stability.

Domestic consumption is expected to remain largely resilient through 2026.

A prolonged conflict could place stagflationary pressure on regional economies.

The warning comes against a backdrop of a fragile ceasefire and ongoing uncertainty around energy flows.