Asia’s growth to slow to 5.1% amid West Asia tensions, says ADB

Amid escalating tensions in West Asia, the Asian Development Bank (ADB) said in a report that economic growth across Asia is likely to slow, even if oil prices stabilise in the coming months.

In its Asian Development Outlook report, the ADB stated that GDP expansion is expected to moderate to 5.1% this year, down from 5.4% in 2025.

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The report’s projections were finalised more than a week into the Iran conflict and assume a scenario in which oil prices gradually normalise and move towards pre-war levels by the end of the year. However, the situation remains volatile, with oil prices fluctuating daily in response to developments in the conflict.

India’s economic growth is projected to decline to 6.9% in 2026 from 7.6% last year, while China’s growth is expected to ease to 4.6% this year from 5% in 2025, the report said. Private consumption is also likely to remain subdued in Asia’s largest economy.

Inflation in the Asian region is expected to accelerate to 3.6% this year from 3% in 2025, driven mainly by higher energy prices.

The price of U.S. crude oil rose 8% to $104.24 per barrel, while Brent crude increased 7% to $102.29 per barrel.

The development follows the United States’ announcement of a blockade of Iranian ports beginning Monday. U.S. President Donald Trump stated that the U.S. Navy would immediately begin blocking ships from entering or leaving the Strait of Hormuz after 21-hour-long negotiations failed.

Recently, the World Bank also said that South Asia’s growth is expected to slow in 2026 amid headwinds from global energy market dislocations. It noted that trade reforms could unlock further growth by reducing trade barriers, especially in emerging export sectors.

South Asia’s growth, which had previously surprised on the upside, is now projected to slow to 6.3% in 2026 due to these ongoing challenges.