ADB lowers Asia-Pacific growth forecast amid trade frictions

Thursday, 24 July 2025 00:02 - - {{hitsCtrl.values.hits}}

The Asian Development Bank (ADB) has revised downward its GDP growth forecast for Asia and the Pacific, including Sri Lanka, citing heightened risks from escalating US tariff policies and rising global trade tensions.

The updated projection was released yesterday in the ADB’s Asian Development Outlook (ADO) July 2025 report, reflecting a broader regional slowdown.

Although the ADB did not disclose Sri Lanka’s exact revised figure in the summary, the broader South Asia regional growth forecast has been reduced to 5.9%, down from 6% projected in the ADO’s April 2025 edition. The updated outlook reflects both external shocks and mounting trade-related headwinds.

The ADB lowered its growth forecasts for economies in developing Asia and the Pacific this year and next year.

It forecasts the region’s economies will grow by 4.7% this year, a 0.2 percentage point decline from the projection issued in April. The forecast for next year has been lowered to 4.6% from 4.7%.

“Asia and the Pacific has weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty,” said ADB Chief Economist Albert Park. “Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.”

Prospects for developing Asia and the Pacific could be dented further by an escalation of US tariffs and trade tensions. Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices, and a worse-than-expected deterioration in the property market of the People’s Republic of China (PRC).

Growth projections for the PRC, the region’s largest economy, are maintained at 4.7% this year and 4.3% next year. Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports.

India, the region’s second-largest economy, is forecast to grow by 6.5% this year and 6.7% next year—down 0.2 and 0.1 percentage points, respectively, from April projections—as trade uncertainty and higher US tariffs affect exports and investment.

Economies in Southeast Asia will likely be hardest hit by worsened trade conditions and uncertainty. The ADB now predicts the subregion’s economies will grow 4.2% this year and 4.3% next year, down roughly half a percentage point from April forecasts for each year.

Bucking the downward trend are economies in Caucasus and Central Asia. The subregion’s growth projections have been raised by 0.1 percentage points for both this year and next to 5.5% and 5.1%, respectively, largely reflecting an anticipated boost in oil production.

Inflation in developing Asia and the Pacific is projected to continue slowing, amid easing oil prices and strong farm output reducing food price pressures. The ADB forecasts a regional inflation of 2.0% this year and 2.1% next year, compared with its April projections of 2.3% and 2.2%, respectively.

(Source: https://www.adb.org/news/adb-lowers-economic-growth-forecast-asia-and-pacific)

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