The Asian Development Bank raised its 2026 growth forecast for developing Asia to 5.0% in an update released this week, lifting the figure from the 4.9% it projected in April. The Manila-based lender attributed the revision to resilient household spending and public investment across South and Southeast Asia, which it said are now doing more of the work than exports.
According to the update, the upgrade is driven largely by India, where the ADB held its growth estimate at 6.7% on the strength of rural consumption and a sustained government capital-spending programme. Southeast Asia was revised up to 4.8%, with Vietnam, the Philippines and Indonesia all contributing.
The bank struck a more cautious note on the external picture. It said merchandise export growth across the region is expected to slow in the second half of 2026 as tariff measures introduced by the United States earlier this year continue to work through supply chains. Semiconductors and consumer electronics, two of Asia's largest export categories, were singled out as exposed.
China remains the soft spot
The ADB kept its 2026 forecast for the People's Republic of China at 4.5%, unchanged from April. The bank pointed to a property sector that has yet to stabilise and to subdued consumer confidence, factors it said are limiting the spillover of Chinese demand into neighbouring economies. Albert Park, the ADB's chief economist, said in the accompanying statement that domestic demand had become "the more reliable engine" for much of the region this year.
Inflation across developing Asia was projected at 2.6% for 2026, down from 2.9% previously, giving several central banks room to hold or cut policy rates. The bank noted that Bank Indonesia and the Bank of Thailand have both eased this year, while the Reserve Bank of India has signalled a pause.
Risks tilted to the downside
The update listed an escalation of trade restrictions, a sharper-than-expected slowdown in China and renewed financial-market volatility as the principal risks to the outlook. The bank also flagged the cost of climate-related disasters, which it estimated at billions of dollars annually for the region's lower-income economies.
The ADB is scheduled to publish its next full Asian Development Outlook in July. Separately, the International Monetary Fund is due to update its own regional projections later in the summer, when the effect of this year's tariff changes on trade volumes is expected to be clearer.