Asian economies face ‘formidable test’ as Middle East conflict drags on: ADB

Economic growth across Asia is likely to slow even if oil prices stabilise in the coming months, as the impact of war in the Middle East ripples through industries from manufacturing to tourism, according to the Asian Development Bank.The US and Israeli war on Iran is projected to halt developing Asia’s economic upswing, with the region’s gross domestic product expansion seen moderating to 5.1 per cent this year from 5.4 per cent in 2025, the ADB said in its outlook report on Friday.“Developing Asia and the Pacific’s economic ascent faces a formidable test,” ADB President Masato Kanda said in the report. “While the region’s direct exposure is limited, it remains vulnerable to rising prices for energy and other commodities, which fan inflation and tighten financial conditions.”If the conflict drags on for a year, the region could lose about 1.3 percentage points of growth over 2026 and 2027, the report said.Developing Asia and the Pacific comprises 43 economies, ranging from China and India to Georgia and ⁠Samoa, but excluding Australia, Japan, New Zealand, Singapore and South Korea.ADB President Masato Kanda listens to questions during a press conference in Manila in April 2025. Photo: APThe Manila-based lender forecasts China’s growth will ease to 4.6 per cent this year from 5 per cent in 2025, with private consumption seen remaining subdued in Asia’s largest economy.