B Mirror Report: The Asian Development Bank (ADB) has warned that the ongoing Middle East conflict could significantly impact economic growth across Asia this year and next, as rising energy costs and supply chain disruptions continue to create uncertainty in global markets.

In its latest outlook, the bank projected that growth across developing Asia and the Pacific will slow to 5.1 percent, but cautioned that this forecast may be overly optimistic if the conflict becomes more prolonged and disruptions persist.

Under a more severe scenario in which the US-Israeli conflict with Iran extends into the third quarter, regional growth could fall to 4.7 percent in 2026 and 4.8 percent in 2027.

The ADB stated that most economies in developing Asia and the Pacific are expected to see weaker growth prospects in the coming years. The region’s status as a net energy importer makes it particularly vulnerable to rising oil and gas prices triggered by geopolitical tensions.

ADB Chief Economist Albert Park said higher energy prices could lead to significant income losses across the region. He also warned that even after energy prices stabilize, lingering supply chain disruptions, elevated producer costs, and tighter financial conditions could continue to fuel stagflationary pressures.

The bank further estimated that inflation could rise as high as 5.6 percent in a prolonged conflict scenario, compared to earlier projections of 3.6 percent in 2026 and 3.4 percent in 2027 under an early stabilization outlook.

The report noted that disruptions in the Strait of Hormuz have broader economic consequences beyond fuel markets, affecting regional food security. Higher fertilizer and diesel prices could raise agricultural costs, potentially reducing input use and lowering crop yields, which may worsen food insecurity.

The ADB also highlighted that ongoing global trade uncertainty, including tariff policies under Donald Trump, could further weigh on investment and economic activity in the region.

China, Asia’s largest economy, is expected to see growth slow to 4.6 percent this year and 4.5 percent next year, down from around 5 percent, due to weakness in the property sector and slower export performance.