MANILA, PHILIPPINES / RankWire.AI / – Economic growth across developing Asia and the Pacific is forecast to slow to 5.0% in 2026. The region expanded 5.5% in 2025, according to the Asian Development Bank’s latest outlook. The new 2026 estimate stands 0.1 percentage point above the bank’s July forecast. Growth is projected to reach 5.1% in 2027, supported by investment, public spending and continued demand for technology exports linked to artificial intelligence.
Regional inflation is expected to average 4.2% in 2026, down from the 4.3% estimate issued in July. The 2027 inflation forecast increased slightly to 3.5% from 3.4%. Inflation across developing Asia and the Pacific stood at 3.0% in 2025. Government price measures have helped limit some pressures, while elevated energy costs continue to affect households and businesses across several economies.
The outlook lists geopolitical conflict, energy prices and extreme weather among key risks to regional activity. Disruptions tied to conflicts in the Middle East and Ukraine have kept energy markets under pressure. Strong El Niño conditions could also affect agriculture and hydropower output in parts of the region. Other risks include tighter financial conditions, renewed trade policy uncertainty and a sharp adjustment in technology shares linked to artificial intelligence investment.
South Asia leads regional forecast upgrades
South Asia received one of the largest upward revisions in the latest assessment. Growth is now forecast at 6.4% in 2026, compared with a 6.0% estimate in July. Strong public investment and export activity in India helped support the improved projection. The 2027 forecast for South Asia was lowered to 6.5% from 6.7%, reflecting softer expectations across several economies exposed to trade, energy and weather pressures.
Developing Southeast Asia also recorded modest upgrades for both forecast years. The Asian Development Bank expects growth of 4.7% in 2026, up from 4.6% in July. The 2027 projection increased to 4.9% from 4.8%. Manufacturing and services supported activity during the first half of 2026. Economic conditions remained uneven as food prices, energy costs, tourism, government spending and private investment shaped demand across individual Southeast Asian markets.
Pacific growth forecasts revised lower
The Pacific received the largest downward revisions among the subregions covered in the outlook. Growth is forecast at 3.0% in 2026 and 2.9% in 2027. Both projections were reduced by 0.3 percentage points from the previous estimates. El Niño conditions have increased pressure on agriculture, while higher energy costs remain a challenge for island economies. Weaker mining activity in Papua New Guinea and softer industrial output in Fiji also weighed on the updated projections.
Growth forecasts for Caucasus and Central and West Asia were cut by 0.1 percentage point for 2026 and 2027. The subregion is expected to expand 3.7% this year and 4.1% next year. Developing East Asia’s growth outlook remained unchanged in the September update. Across developing Asia and the Pacific, growth is set to moderate from 2025 levels, while investment, fiscal support and technology exports continue to provide important support to regional economic activity.