The Asian Development Bank has sharply downgraded its growth forecast for developing Asia and the Pacific to 4.7% in 2026 in a special update issued on April 30, citing deepening disruptions from the Middle East conflict. The new figure undercuts the 5.1% projection the bank published in its April Asian Development Outlook just three weeks earlier.
The lender now sees regional growth at 4.7% in 2026 and 4.8% in 2027, while inflation is projected to accelerate to 5.2% this year — up from 3.0% in 2025 — before easing to 4.1% in 2027.
“Our revised outlook is a significant downward revision for growth and a sharp increase in inflation following a special update to reflect the deepening crisis,” ADB President Masato Kanda said. “We are confronting systemic, long-lasting disruptions to global energy and trade networks, not just temporary volatility.”
The forecast assumes oil averaging around USD 96 per barrel in 2026, up from a USD 69 pre-conflict baseline in January and February, before easing toward USD 80 in 2027. Brent has traded above USD 120 in recent sessions, but ADB sees prices stabilising near the mid-90s as its central case.
Under a downside scenario in which oil prices spike again in May 2026 and remain elevated, regional growth could slow to 4.2% in 2026 and 4.0% in 2027, while inflation could climb to 7.4%.
ADB warned the outlook is especially dire for economies heavily dependent on imported fuel, remittances, tourism or external financing — directly identifying Sri Lanka among the most exposed. The brief recommends allowing energy prices to pass through partially rather than imposing broad subsidies, keeping fiscal support targeted and time-bound, and using central bank communication to anchor inflation expectations.
Sources: Asian Development Bank, EconomyNext.
