ADB sees developing Asia slowing to 5% growth as El Niño lifts price risks
Victoria Shinder2 min readThe Asian Development Bank expects growth in developing Asia and the Pacific to slow from 5.5% in 2025 to 5% this year before edging up to 5.1% in 2027, according to its Asian Development Outlook for September, released on 23 September. The 2026 figure is 0.1 percentage points higher than in the July update. The bank credits strong investment, government stimulus and technology exports driven by the global AI investment cycle, while geopolitical tensions and a strengthening El Niño push up energy and food prices.
On prices, ADB trimmed its regional inflation forecast for 2026 to 4.2% from 4.3%, saying price stabilisation measures partly offset persistently high energy prices, and raised its 2027 forecast slightly to 3.5% from 3.4%. Both remain above the 3% recorded in 2025.
The regional picture is uneven. Developing Southeast Asia's forecasts rise to 4.7% for 2026 and 4.9% for 2027 after a stronger first half; the outlook for developing East Asia, including China, is unchanged. South Asia's 2026 growth forecast is raised to 6.4% from 6%, on public investment and export growth in India, while its 2027 figure is cut by 0.2 points to 6.5%. The Caucasus and Central and West Asia are revised down by 0.1 points in both years, to 3.7% and 4.1%, mainly on weaker external demand, particularly in Türkiye. The Pacific takes the largest cuts, 0.3 points in both years, to 3% and 2.9%.
What it means
The report's two named risks both work through prices. A broader conflict in the Middle East or an intensified war in Ukraine would keep energy expensive and volatile; a very strong El Niño, which ADB expects to persist into the first quarter of 2027, would raise energy demand and cut harvests and hydropower. ADB President Masato Kanda put it directly: food and energy prices rise and the most vulnerable are hit hardest.
For the region's currencies and central banks, the combination matters more than the headline growth number. ADB's own picture is growth near 5% with inflation above 4% and risks on the supply side, and the report lists a sharp correction in AI-related equity valuations and tighter financial conditions as further downside risks. Those are ADB's projections and assessments, reported here as such - they are the reference point that regional finance ministries and central banks will be measured against in the coming months.