Asian Development Bank Cuts Regional Growth Forecasts On Impact Of War In Middle East

(MENAFN- Khaleej Times) The Asian Development Bank on Wednesday cut its economic growth forecast for the region to 4.7% this year and 4.8% next year, down from earlier projections of 5.1% 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% in 2026 from an earlier projection of 3.6%.

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.

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“We are confronting systemic, long-lasting disruptions to global energy and trade networks, not just temporary volatility," he said in a statement.

Earlier this month, the International Monetary Fund cut its 2026 global growth outlook to 3.1% 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% this year and 4.0% in 2027, with inflation surging to 7.4% this year.

"Central banks should focus on limiting excessive market volatility while keeping a close watch on inflation expectations," it said.

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