ADB Upgrades Asia's Economic Outlook, Yet Growth Remains Off Previous Trajectory

The Asian Development Bank’s (ADB) latest report indicates a modest improvement in Asia’s economic growth outlook; however, overall growth is still expected to remain subdued, as persistent disruptions stemming from geopolitical risks continue to pressure supply chains and production costs. The ADB forecasts that the Asian economy will grow by 4.9% in 2026—up from 4.7% projected in its previous special update report. This upward revision reflects stabilizing oil prices and supply conditions following global energy market volatility triggered by geopolitical developments. Nevertheless, the new forecast remains notably below the 5.1% growth rate projected in the ADB’s regular April outlook, signaling that the regional economy has yet to return to its prior growth trajectory. On inflation, the ADB expects Asia’s inflation rate to stand at 4.3% in 2026—significantly lower than the 5.2% projected in its earlier update, though still above the 3.6% level forecast in the April regular outlook. Inflation is projected to ease further to 3.4% in 2027. The ADB cautions that the impact of geopolitical tensions may extend beyond energy markets and could unfold with a lag, gradually spilling over into other sectors of the economy. Albert Park, ADB Chief Economist, noted in an interview that robust semiconductor demand linked to artificial intelligence investment is helping, to some extent, offset the shock from rising energy prices.

Asia-Pacific Region’s Economic Growth Prospects Look Promising (International Perspective)

Against the backdrop of sluggish global economic recovery this year, the Asia-Pacific region has demonstrated resilience and vitality, with regional cooperation achieving steady progress. As one of the most important economies in the region, China possesses enormous growth potential and continues to serve as an engine driving regional economic expansion, making significant contributions to regional growth. Vitality in Regional Economy The Asia-Pacific region accounts for one-third of the world’s population, over 60% of global GDP, and nearly half of global trade. Experts point out that the region is rich in production factors, boasts a massive market, features diverse resource endowments, and exhibits strong economic complementarity. Currently, domestic demand in the region is gradually recovering, tourism is rebounding rapidly, consumption remains resilient, and inflationary pressures are easing in several countries. According to the latest data released by the World Tourism Organization, as of July this year, tourism in the Asia-Pacific region had recovered to 61% of pre-pandemic levels. The Pacific Asia Travel Association recently projected that international tourist arrivals in the region would exceed 516 million by the end of 2023—reaching approximately 76% of 2019 pre-pandemic levels—and rise to 107% and 116% of pre-pandemic levels in 2024 and 2025, respectively. The Asia-Pacific region is the world’s most dynamic growth engine and serves as a pioneer and demonstration zone for digital transformation and digital economy development. International Data Corporation (IDC) recently projected that in 2023, the digital economy’s contribution to total regional economic output in Asia-Pacific will rise to 65%; one-third of companies in the region are expected to generate over 30% of their internal revenue through digital products and services; and by 2027, enterprises across the region are projected to derive 43% of their revenue from digital economy value chains. Experts believe that digitalization is reshaping the Asia-Pacific economy and that the region stands at a pivotal moment for digital transformation. The International Monetary Fund (IMF) projects that inflation in most Asia-Pacific economies will return to central bank target ranges next year—a process expected to outpace that of other regions worldwide. According to the latest Asia-Pacific Economic Outlook report, global inflation stood at 8.7% in 2022, while the Asia-Pacific region recorded only 3.6%; the region’s inflation rate is projected to decline further to 3.5% in 2024. Earlier, the ADB’s 2023 Asian Development Outlook report also stated that inflation in the Asia-Pacific region will revert to pre-pandemic levels, with inflation in developing economies in the region expected to reach 3.6% this year and 3.5% in 2024. Strengthening Regional Cooperation In June this year, the Regional Comprehensive Economic Partnership (RCEP) entered full implementation across all 15 signatory countries. Under the agreement, over 90% of goods traded within the region will eventually be subject to zero tariffs, facilitating smoother and closer trade and investment ties among members and further promoting trade and investment liberalization and facilitation in the Asia-Pacific region—thereby enhancing the region’s endogenous growth momentum. With RCEP’s formal entry into force, its benefits are gradually materializing. China–ASEAN Free Trade Area (CAFTA) construction is advancing steadily, and industrial and supply chain cooperation between the two sides—based on complementary strengths—is intensifying. Bilateral trade reached over $970 billion last year, marking three consecutive years as each other’s largest trading partner. Negotiations for CAFTA 3.0 were launched earlier this year and are expected to further reduce both tariff and non-tariff barriers, supporting deeper regional economic integration.

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