The Asian Development Bank released its 'Asia Development Outlook 2026' report on the 10th, stating that the ongoing conflict in the Middle East has heightened global geopolitical risks, continuously increasing the economic downside risks faced by developing economies in the Asia-Pacific region.
According to Xinhua News Agency, the report points out that although direct trade with Middle Eastern economies is limited, developing economies in Asia-Pacific remain highly susceptible to spillover effects from global energy markets, trade and transport networks, and financial environments. Notably, fertilizers, urea, ammonia, and other products mainly supplied by the Middle East are mostly shipped through the Strait of Hormuz. Production and transportation disruptions have resulted in tightening supply and price increases, raising agricultural costs, which could subsequently push up food prices. Additionally, the transport disruption of raw materials such as helium, sulfur, and petrochemical products—critical for semiconductor manufacturing—may also affect the semiconductor industry.
The ADB forecasts that if the situation in the Middle East stabilizes early, the economic growth rates of developing Asia-Pacific economies in 2026 and 2027 will both slow to 5.1% from 5.4% in 2025, while the inflation rate will rise from 3.0% in 2025 to 3.6% in 2026 and 3.4% in 2027.
The report notes that if chaos in the Middle East persists until the third quarter of this year, the economic growth rates of developing Asia-Pacific economies in 2026 and 2027 could slow further to 4.7% and 4.8%, respectively, with the inflation rate surging to 5.6% in 2026.
ADB Chief Economist Albert Park stated that rising energy prices will push up production costs and prices. Should the turmoil persist for an extended period, it will further elevate energy prices and exacerbate inflation, dragging down the region’s economic growth prospects. In addition, risks such as tariff hikes and uncertainty in trade policies may also disrupt global supply chains and weaken external demand.