Asia Pacific Growth Rate
Forecasts Down 12 to 15 percent with High Energy Costs
Global institutions forecast slower
growth in Asia-Pacific this year, as the Iran war and tariff risks combine to
disrupt global trade
2. The slowdown is driven by rising energy costs
linked to the Middle East conflict and ongoing global trade uncertainty.
3. The IMF projects emerging Asia growth at 4.9% in 2026,
down from 5.5% in 2025.
4. The ADB forecasts developing Asia growth at 5.1%,
compared to 5.4% last year.
5. The World Bank estimates East Asia and Pacific growth at 4.2%,
down from 5% in 2025.
6. Despite the broader slowdown, China showed
resilience with 5% growth
in Q1 2026, though growth is expected to moderate.
7. China’s full-year growth is projected at 4.2–4.6% by different
institutions.
8. The conflict has caused an energy shock, pushing up
oil and gas prices and affecting import-dependent economies.
9. The WTO warns that global growth could fall by 0.3
percentage points and merchandise trade by 0.5 percentage points if
high energy prices persist.
10. Asia-Pacific economies, which account for about 32% of global trade,
are especially vulnerable due to reliance on imported energy and inputs.
11. Ongoing U.S. tariff risks and expiring trade
agreements add to uncertainty, despite some recent trade deals.
12. The conflict has also disrupted global shipping routes,
raising costs and causing supply chain pressures.
13. Prolonged tensions could reduce global demand,
impacting manufacturing and container shipping volumes.
14. Experts warn that further military escalation
could significantly weaken global trade and economic performance.
[ABS News Service/20.04.2026]
Asia-Pacific
economies are likely to suffer a slowdown in growth this year, as rising costs linked
to the US-Israel war on Iran combine with lingering trade uncertainty to threaten
global trade flows, according to forecasts by top international organisations.
The
predictions come despite China showing resilience in the first quarter by posting
better-than-expected growth of 5 per cent and finance minister Lan Foan last week
stressing that the world’s second-largest economy would remain an engine for global
growth.
The
International Monetary Fund (IMF) projected in its World Economic Outlook report
on Tuesday that growth in emerging and developing Asia would reach 4.9 per cent
this year, down from 5.5 per cent in 2025. It expects growth to ease in China as
well.
“The
global economy has, to date, withstood a series of shocks, yet another one – this
time a military conflict engulfing the Middle East since the end of February – is
testing this resilience,” the report said.
Days
earlier, the Asian Development Bank also forecast economic growth in developing
Asia and the Pacific to slow this year. It predicted the region would achieve 5.1
per cent growth in 2026, down from 5.4 per cent last year, with economies “weighed
down by the conflict in the Middle East and continuing trade uncertainty”.
The
lender forecast China’s economic growth at 4.6 per cent this year, down from 5 per
cent in 2025.
The
World Bank expects East Asia and Pacific regional economic growth to hit 4.2 per
cent in 2026, down from 5 per cent last year, “as the energy shock due to the Middle
East conflict compounds the adverse impact of elevated trade barriers, global policy
uncertainty and domestic economic difficulties”.
It
tipped China’s growth to reach 4.2 per cent this year.
The
World Trade Organization (WTO), meanwhile, has warned that global trade and economic
growth could slow this year due to the ongoing conflict in the Middle East, with
regions dependent on energy imports likely to be hit hardest.
If
crude oil and liquefied natural gas prices remain high throughout 2026, global growth
will decline by 0.3 percentage points and global trade in merchandise will fall
by 0.5 percentage points, according to a summary of the WTO’s Global Trade Outlook
and Statistics report released in late March.
Asia-Pacific
manufacturing economies rely on imported energy, raw materials and intermediate
components for goods such as consumer electronics.
Countries
in the region – which together account for 32 per cent of global trade – also continue
to face risks of disruption from US tariffs, despite several nations agreeing trade
deals with Washington and the US Supreme Court striking down the duties President
Donald Trump imposed using emergency powers last year.
Some
of those trade deals are set to expire this year, and Trump has threatened to
find new ways of raising tariffs.
Meanwhile,
countries face knock-on economic issues from the war on Iran, which has
disrupted global shipping traffic and led to surging fuel prices and supply shortages
in some areas.
Marine
shippers expect a drop in business if the war lasts long enough to dent global consumer
demand, according to Simon Heaney, senior manager for container research at maritime
consultancy Drewry.
“Any
escalation of military activity will weigh heavily on global trade and therefore
on share performance of containers,” Heaney told an online briefing on Wednesday.