Developing Asia faces slower growth as US tariffs bite: ADB

ADB forecasts the region’s economies will grow by 4.7 per cent this year, a 0.2 percentage point (pp) decline from the projection issued in April. The forecast for next year has been lowered to 4.6 per cent from 4.7 per cent, according to Asian Development Outlook (ADO) July 2025 released today.

Prospects for developing Asia and the Pacific could be dented further by an escalation of US tariffs and trade tensions. Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices, and a worse-than-expected deterioration in the property market of China.

“Asia and the Pacific has weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty,” said Albert Park chief economist at ADB. “Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.”

The growth projections for China, the region’s largest economy, are maintained at 4.7 per cent this year and 4.3 per cent next year. Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports.

India, the region’s second-largest economy, is forecast to grow by 6.5 per cent this year and 6.7 per cent next year—down 0.2 and 0.1 percentage points, respectively, from April projections—as trade uncertainty and higher US tariffs affect exports and investment.

Economies in Southeast Asia will likely be hardest hit by worsened trade conditions and uncertainty. ADB now predicts the subregion’s economies will grow 4.2 per cent this year and 4.3 per cent next year, down roughly half a pp from April forecasts for each year, said the outlook.

Bucking the downward trend are economies in Caucasus and Central Asia. The subregion’s growth projections have been raised by 0.1 pp for both this year and next to 5.5 per cent and 5.1 per cent, respectively, largely reflecting an anticipated boost in oil production.

Inflation in developing Asia and the Pacific is projected to continue slowing, amid easing oil prices and strong farm output reducing food price pressures. ADB forecasts regional inflation of 2 per cent this year and 2.1 per cent next year, compared with its April projections of 2.3 per cent and 2.2 per cent, respectively.

ALCHEMPro News Desk (SG)