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ADB Raises Developing Asia Growth Outlook Despite Energy, Price Risks; Holds China Steady

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ADB Raises Developing Asia Growth Outlook Despite Energy, Price Risks; Holds China Steady

The Asian Development Bank raised its 2026 growth forecast for developing Asia and the Pacific to 5.0% from 4.9% in July, despite flagging risks including a "strengthening El Niño" that is expected to push food and energy prices higher.

The region's economy is now seen expanding 5.1% in 2027, unchanged from July, according to the bank's September Asian Development Outlook released Wednesday. Growth in 2025 came in at 5.5%.

"The region has remained resilient, but the risks are growing," said ADB President Masato Kanda.

"A strengthening El Niño with drier conditions means smaller harvests and reduced hydropower, pushing food and energy prices higher, and hitting the most vulnerable the hardest."

The ADB also identified the Middle East conflict as another main risk to the region's growth and inflation outlook.

China's outlook was held steady at 4.6% for 2026 and 4.5% for 2027, matching July's projections. However, ADB lowered its 2026 inflation forecast for China to 0.9% from 1.2%.

India's growth forecast for the fiscal year ending March 2027 was raised to 7.0% from 6.6% in July, an upgrade the bank attributed to "resilient consumption, healthy investment, and strong services exports." ADB said these factors are expected to offset the drag from higher energy prices and a weaker monsoon.

The following fiscal year's forecast for India was trimmed to 7.1% from 7.3%.

Elsewhere, Thailand's 2026 forecast was raised to 2.0% from 1.8%, while the 2027 projection was cut slightly to 1.9% from 2.0%. Malaysia's forecasts were upgraded for both years, to 4.9% in 2026 from 4.6% and 4.7% in 2027 from 4.5%.

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