--- title: "Middle East Conflict Testing Asia's Economic Mettle, ADB Says" type: "News" locale: "en" url: "https://longbridge.com/en/news/282264966.md" description: "The Asian Development Bank warns that the ongoing Middle East conflict poses significant risks to Asia-Pacific economies, potentially increasing inflation and slowing growth. Chief economist Albert Park highlighted that geopolitical tensions are central to the region's economic outlook. If the conflict persists, growth could drop to 4.7% this year, with inflation rising. The report also notes disruptions in commodity supplies, affecting agriculture and technology sectors, and warns of tighter financial conditions impacting highly leveraged economies. Overall, growth is expected to slow across all subregions, with varying impacts on individual countries." datetime: "2026-04-10T00:30:45.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/282264966.md) - [en](https://longbridge.com/en/news/282264966.md) - [zh-HK](https://longbridge.com/zh-HK/news/282264966.md) --- # Middle East Conflict Testing Asia's Economic Mettle, ADB Says By Fabiana Negrin Ochoa and Jihye Lee Asia-Pacific economies face a challenging time ahead as the fallout of the Middle East conflict threatens to fan inflation and curb growth, the Asian Development Bank says in its latest outlook. "The conflict in the Middle East places geopolitical risks squarely at the center of the economic outlook for developing Asia and the Pacific," said Albert Park, chief economist at ADB. The report comes after the U.S. struck a fragile cease-fire with Iran after five weeks of hostilities also involving Israel, which said it has backed the truce. "The cease-fire still appears quite fragile," Park said, adding that "prediction markets are not putting a high probability that it's going to last." When the multilateral development bank finalized its forecasts on March 10, it envisaged the conflict lasting around 1 month, with disruptions gradually easing thereafter. Under that scenario, it projects that growth in developing Asia and the Pacific will cool to 5.1% in both 2026 and 2027 from 5.4% last year, buoyed by still-resilient domestic demand. That assumes oil and gas prices peak in March, then normalize gradually. In that case, the crisis raises inflation across developing Asia and dampens gross domestic product growth in energy-importing economies this year, but does not materially undermine the region's resilience. But if tensions last through the third quarter, growth could slow to 4.7% this year, and to 4.8% the next. "All of those \[scenarios\] lead to downgrades in terms of growth and increases in terms of inflation," said Park. "We're just in this range of uncertainty." And it's not just energy prices that pose an economic threat for Asia. Gulf economies are major suppliers of fertilizers and related inputs, including urea and ammonia, much of which go through the Strait of Hormuz, a waterway through which the vast majority of Middle East commodity exports are transported, ADB said. Fighting has effectively choked off traffic through the strait, sending prices of many commodities soaring, with implications for industries from electronics to farming. Higher fertilizer prices raise agricultural production costs, eventually feeding through to food prices, while semiconductor output could be affected by disruptions to shipments of helium, sulfur and petrochemical products used in chipmaking, the ADB said. The conflict also interrupts aviation links between Asia and Europe, which will weigh on tourism-dependent economies, the Manila-based bank added. Remittance inflows from the Middle East, too, could slow. Another drag comes from the toll the conflict is taking on financial markets. Steep equities selloffs can curb confidence and consumption, ADB said, and regional financial conditions have already tightened. A further deterioration would exacerbate debt issues in highly leveraged economies. While the impact will be felt differently across Asia, ADB thinks growth will slow in all subregions. Growth in advanced economies--a grouping including Australia, Japan, South Korea, Singapore and Taiwan--is expected to slow to 2.2% this year from 2.5% in 2025, before weakening to 1.8% in 2027. "Strong technology exports will only partly offset trade constraints and the fallout from the Middle East conflict," the ADB said. Growth in Japan is set to soften markedly as high energy prices dim market sentiment and the boost from export front-loading last year to get ahead of tariffs fades. By contrast, the bank sees growth picking in South Korea and staying strong in Taiwan thanks to sustained demand for semiconductors. The pace of economic expansion in developing Asia and the Pacific--a group comprising the ADB's 43 members--will remain stronger outside of China. In China, exports and investment in high-tech sectors will help offset subdued household consumption and property investment, but ADB still expects GDP growth to moderate in 2026 and 2027. Growth in India will ease but remain robust, bolstered by resilient consumption, recent trade agreements and structural reforms. Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com and Jihye Lee at jihye.lee@wsj.com (END) Dow Jones Newswires April 09, 2026 20:14 ET (00:14 GMT) Copyright (c) 2026 Dow Jones & Company, Inc. ### Related Stocks - [EPP.US](https://longbridge.com/en/quote/EPP.US.md) - [GMF.US](https://longbridge.com/en/quote/GMF.US.md) ## Related News & Research - [GERMANY'S MERZ: IT WILL LIKELY TAKE YEARS TO FULLY UNDERSTAND THE CURRENT SHIFTS IN GEOPOLITICS AND POLITICAL POWERS](https://longbridge.com/en/news/287057643.md) - [European Undervalued Small Caps With Insider Action For May 2026](https://longbridge.com/en/news/286721352.md) - [The robber baron Long Island Rail Road strike](https://longbridge.com/en/news/286901134.md) - [Coffee prices aren’t the only problem. How retirees can fight inflation.](https://longbridge.com/en/news/286675059.md) - [Undiscovered Gems in Europe for May 2026](https://longbridge.com/en/news/286722063.md)