The ongoing conflict in the Middle East has amplified global geopolitical risks and intensified downside risks for economic growth of developing Asia and the Pacific, according to a new report released by the Asian Development Bank (ADB) on Friday.

The Asian Development Outlook April 2026 projected that under an early stabilization scenario, regional growth of developing Asia and the Pacific is expected to moderate to 5.1 percent in both 2026 and 2027, from 5.4 percent in 2025.

However, if disruptions in the Middle East last through the third quarter of 2026, the growth could slow to 4.7 percent in 2026 and 4.8 percent in 2027.

Albert Park, ADB's chief economist, said higher energy prices will raise production costs and consumer prices, while export growth will normalize following last year's front-loading ahead of U.S. tariff increases. He warned that more persistent disruptions would make the inflation situation even worse and weigh further on growth across the region.

According to ADB's forecast, under the early stabilization scenario, inflation is projected at 3.6 percent in 2026 and 3.4 percent in 2027, up from 3 percent in 2025. However, if tensions in the Middle East last through the third quarter of 2026, inflation would rise to 5.6 percent this year.

The report noted that despite having only modest direct trade exposure to Middle Eastern economies, developing Asia and the Pacific is highly vulnerable to spillovers transmitted through global energy markets, trade and transport networks, and financial conditions.