Middle East conflict fallout to hit Asia’s economies through 2027, ADB says

MANILA, April 11 — The Middle East war is expected to drag on Asia’s economies over this year and next, the Asian Development Bank warned yesterday, as it predicted growth to slow to 5.1 per cent across the world’s most populous region.

That prediction could prove optimistic, however, if new evidence suggesting a “more prolonged conflict and more persistent disruptions” bore out, it said.

Growth predictions could fall to as low as 4.7 per cent for 2026 and 4.8 per cent in 2027 should the US-Israeli war with Iran drag into the third quarter.

“Most economies in developing Asia and the Pacific will see their growth outlook worsen this year and in 2027,” was the bank’s stark assessment.

The region’s status as a net energy importer left it particularly vulnerable to the war’s fallout, ADB chief economist Albert Park told reporters at an embargoed Thursday new briefing

“Higher energy prices can generate significant income losses,” Park said.

“Even after energy prices normalise, supply-chain disruptions, higher producer prices, and tighter financial conditions would prolong stagflationary pressures,” he added.

A more drawn-out conflict in the Middle East could also see inflation spike by as much as 5.6 per cent, the ADB said yesterday.

Completed in March, the bank’s report had predicted price jumps of 3.6 per cent in 2026 and 3.4 per cent in 2027 under what it dubbed an “early stabilisation scenario”.

Park noted that Iran’s squeeze on shipping in the Strait of Hormuz had ripple effects far beyond the gas pump, including regional food security.

“Although rice prices still remain relatively low … high fertiliser and diesel prices raise agricultural costs, which could lead to less input use and lower yields later in the year, and that could contribute to food insecurity,” Park said.

In Manila yesterday lines stretched around the block in some neighbourhoods as residents flocked to take advantage of a government-backed programme providing rice for just 20 pesos (33 cents) per kilo.

The new ADB report also said continued trade uncertainty in the face of US President Donald Trump’s tariff regime could be expected to weigh on regional investment.

Global powerhouse China was expected to see growth dip to 4.6 per cent this year and 4.5 per cent next, down from five per cent, on the back of continued weakness in its property market and slower export growth, the report said. — AFP