Manila: The Asian Development Bank (ADB) has reduced its growth forecast for developing Asia to 4.8 percent for 2025 due to a new global trade environment influenced by US tariffs. The Manila-based lender also revised its April forecast of 4.9 percent growth for the current year and adjusted next year's projection to 4.5 percent from 4.7 percent. Developing Asia comprises 46 economies across Central Asia, East Asia, South Asia, Southeast Asia, and the Pacific, excluding the industrialized nations of Japan, Australia, and New Zealand.
According to Kuwait News Agency, ADB Chief Economist Albert Park highlighted that US tariffs have reached historically high levels, leading to elevated global trade uncertainty. Despite strong exports and robust domestic demand sustaining growth in developing Asia and the Pacific this year, the deteriorating external environment is affecting the outlook. Park emphasized the need for governments to maintain sound macroeconomic management, openness, and regional integration amid the challenging global trade climate.
The ADB noted that higher US tariffs and persistent trade uncertainty are anticipated to impact the region's growth. Key risks to developing Asia's outlook include ongoing uncertainty surrounding US trade policy, potential sectoral tariffs on semiconductors and pharmaceuticals, and unresolved US-China trade negotiations. China's growth forecasts for 2025 and 2026 remain at 4.7 percent and 4.3 percent, respectively, as policy measures are expected to mitigate the effects of higher tariffs and a weak property market. The ADB also reduced India's growth forecast to 6.5 percent for this year and next, impacted by steep US tariffs on Indian exports imposed in August.
Southeast Asian economies face the largest downgrades in growth forecasts due to weaker global demand and trade uncertainty, with the subregion's growth now projected at 4.3 percent for both 2025 and 2026, a 0.4 percentage point decrease from April's forecasts.
The ADB, established in 1966, is a multilateral development finance institution aimed at reducing poverty in Asia and the Pacific. It is owned by 69 members, primarily from the region, along with the US, Britain, and Germany.