The Asian Development Bank (ADB) has revised down its growth forecasts for developing economies in Asia and the Pacific for both 2025 and 2026, citing weaker external demand, global trade uncertainty, and subdued domestic consumption.
According to the Asian Development Outlook (ADO) July 2025 report released Friday, the Manila-based lender now expects the region to grow by 4.7 percent in 2025, a 0.2 percentage point reduction from its April forecast.
The outlook for 2026 has also been lowered by 0.1 percentage point to 4.6 percent.
The ADB said the downgrades reflect expectations of declining exports amid rising tariffs imposed by the United States and ongoing trade tensions.
In addition, softer domestic demand across several economies and uncertainty over investment conditions have contributed to the weaker outlook.
The bank warned that additional risks could further weigh on regional growth.
These include any escalation in trade restrictions by major economies, geopolitical conflicts that could disrupt global supply chains and increase energy costs, and a sharper-than-expected deterioration in China’s property market, which remains under pressure despite policy support.
China’s growth projection remains unchanged at 4.7 percent for 2025 and 4.3 percent for 2026.
The ADB expects that recent stimulus measures will support consumption and industrial activity, helping to offset continued weakness in real estate and export performance.
India, the region’s second-largest economy, is projected to expand by 6.5 percent in 2025 and 6.7 percent in 2026, both slightly below earlier forecasts.
The ADB noted that higher U.S. tariffs and weaker global demand have impacted India’s export outlook and private investment sentiment.
Southeast Asia is expected to be among the most affected subregions, with growth forecasts lowered to 4.2 percent in 2025 and 4.3 percent in 2026.
The ADB cited exposure to global trade cycles, soft external demand, and a more cautious investment environment as key reasons for the downward revisions.
In contrast, the outlook for the Caucasus and Central Asia has improved.
The ADB raised growth forecasts for the subregion to 5.5 percent in 2025 and 5.1 percent in 2026, reflecting expected increases in oil production and continued fiscal support in some economies.
The Pacific subregion’s growth forecast was left largely unchanged at 3.5 percent for 2025 and 3.1 percent for 2026, with country-specific developments and external aid flows influencing individual performance across the region.
ADB Chief Economist Albert Park said that regional economies are facing a more challenging global environment, and continued focus on economic fundamentals, trade openness, and regional integration will be critical to sustaining growth.
He added that proactive policies will be needed to manage volatility and support job creation and investment.
Inflation in developing Asia and the Pacific is expected to ease due to declining oil prices and strong agricultural output.
The ADB now projects regional inflation at 2.0 percent in 2025 and 2.1 percent in 2026, lower than the 2.3 percent and 2.2 percent forecast in April. This reflects moderating food and energy prices and tighter monetary policy across many economies.
It noted that while inflationary pressures are moderating, risks remain from potential energy supply disruptions and currency depreciation in more vulnerable economies, which could translate into higher import costs.
The bank reiterated that sustained investment in infrastructure, inclusive policies, and continued efforts to enhance productivity and economic resilience will be vital for long-term growth across developing Asia and the Pacific.