SINGAPORE — The Asian Development Bank (ADB) on Wednesday cut its economic growth forecast for the region to 4.7 percent this year and 4.8 percent next year, down from earlier projections of 5.1 percent for both years, due to the war in the Middle East.
It also raised its inflation forecast for Asia and the Pacific to 5.2 percent in 2026 from an earlier projection of 3.6 percent.
ADB President Masato Kanda called it a “significant downward revision” that reflected how the war had raised energy prices, tightened financial conditions and weighed on economic activity across the region.
“We are confronting systemic, long-lasting disruptions to global energy and trade networks, not just temporary volatility,” he said in a statement.
The outlooks for developing Southeast Asia, which includes the Philippines, was lowered to 4.2 percent for this year and 4.1 percent for 2027 from 4.7 percent and 4.8 percent. Inflation estimates were raised to 4.5 percent and 3.6 percent from 3.2 percent and 2.8 percent.
Earlier this month, the based ADB cut its Philippine growth forecasts to 4.4 percent from 5.3 percent, citing heightened risks from the Middle East conflict, and raised its inflation projection to 4.0 percent from 3.0 percent.
The outlook for next year was 5.5-percent economic growth and 3.5-percent inflation.
Also earlier this month, the International Monetary Fund cut its 2026 global growth outlook to 3.1 percent because of the Iran war.
The ADB said if the conflict escalated it could lead to a more severe economic impact.
As an example, it said if oil prices spiked in May and then stayed high, growth in developing Asia and the Pacific could slow to 4.2 percent this year and 4.0 percent in 2027, with inflation surging to 7.4 percent this year.
“Central banks should focus on limiting excessive market volatility while keeping a close watch on inflation expectations,” it said.
