The conflict in the Middle East could reduce economic growth in developing Asia and the Pacific by up to 1.3 percentage points and increase inflation by 3.2 percentage points over 2026–2027 if energy market disruptions persist for more than a year, according to research by the Asian Development Bank (ADB). The regional economies are affected through higher energy prices, supply chain and trade disruptions, tighter financial conditions, and potential impacts on tourism and remittances. ADB’s analysis highlights that the severity of these effects depends largely on the duration of the disruptions, with developing Southeast Asia and the Pacific facing the greatest growth challenges, while South Asian economies may experience the highest inflationary pressures.
ADB Chief Economist Albert Park noted that prolonged energy disruptions could force governments to manage a difficult trade-off between slower growth and rising inflation, emphasizing the need for policies that protect vulnerable populations and enhance long-term resilience. Recommended measures include allowing some energy price adjustments to encourage conservation and investment in alternatives, providing targeted and time-bound fiscal support to affected households and industries, ensuring central banks manage market volatility while monitoring inflation expectations, and implementing practical energy-saving measures in transport, workplaces, and public spaces. The ADB continues to support sustainable and inclusive growth across the region by leveraging financial tools and strategic partnerships to strengthen infrastructure, resilience, and long-term economic stability.
