MANILA – The developing economies of Asia and the Pacific (excluding Australia, Japan, and New Zealand) will grow less this year, primarily due to a reduction in exports amid rising tariffs in the United States, according to a new report by the Asian Development Bank (ADB).
The ADB forecasts that the economies of the region will grow by 4.7% this year, representing a decrease of 0.2 percentage points compared to the 4.9% projection published in April.
The forecast for next year has been reduced from 4.7% to 4.6%. In 2024, the Asia-Pacific economic region had grown by 5.1%.
Albert Park, the ADB’s chief economist, stated that “Asia and the Pacific have faced an increasingly complex external environment this year. Economic prospects have weakened amid intensifying global risks and uncertainty.”
Weaker domestic demand, along with global trade uncertainty—under the weight of changing U.S. tariff policies and the impact of geopolitical conflicts—has affected the region’s economic performance.
Risks include armed conflicts and geopolitical tensions, as they could disrupt global supply chains and raise energy prices, according to the ADB’s analysis.
Domestic factors also weigh heavily, such as a more severe deterioration than expected in the real estate market of the regional giant, China.
Growth projections for China remain at 4.7% this year and 4.3% next year. It is expected that consumption and industrial activity stimulus policies will offset the persistent weakness in the real estate market and the decline in exports.
India, the second-largest economy in the region, is projected to grow by 6.5% this year and 6.7% next year (0.2 and 0.1 percentage points less, respectively, than the April projections), as trade uncertainty and rising U.S. tariffs affect exports and investment.
Southeast Asian economies are likely to be the most affected by worsening trade conditions and uncertainty, due to their reliance on exports of textiles and other manufactured goods.
The ADB now predicts that the subregion’s economies will grow by 4.2% this year and 4.3% next year, half a percentage point less than the April projections for each year.
The economies of the Caucasus and Central Asia are bucking the downward trend.
Growth projections for the subregion have been increased by 0.1 percentage points for this year and next, reaching 5.5% and 5.1%, respectively, largely reflecting the anticipated increase in oil production.
The small island states of the Pacific, whose economies partly depend on tourism flows, maintain an estimated growth of 3.9% this year and slightly less, 3.5%, for 2026. Last year, they grew by 4.1%.
Regional inflation in Asia and the Pacific’s developing countries is projected to continue slowing down, thanks to falling oil prices and strong agricultural production, which reduces pressure on food prices.
The ADB forecasts regional inflation at 2.0% this year and 2.1% next year, compared to its April projections of 2.3% and 2.2%, respectively.
“The economies of the region must continue strengthening their fundamentals and promoting free trade and regional integration to drive investment, employment, and growth,” Park said when presenting the new projections.
A-E/HM