Clouds Over Asia’s Growth Horizon
The Asian Development Bank (ADB) has dialed down its optimism for developing Asia. In its latest Asian Development Outlook report released on April 9, the ADB warned that US tariffs and China’s cooling economy could rain on the region’s growth parade over the next two years.
According to the report, if the recently announced US import tariffs are fully rolled out, developing Asia could see its growth shrink by a third of a percentage point this year—and nearly a full point in 2026. That’s not just a drizzle, that’s a potential economic downpour.
The Tariff Trap
ADB Chief Economist Albert Park called the new US tariffs “the elephant in the room.” He noted that the final impact is still up in the air as the scope and timing of these trade measures could shift due to political negotiations or exemptions. However, Park didn’t rule out a worst-case scenario: stronger retaliation from affected countries, greater global trade fragmentation, and a possible pullback in global investments.
In short, if this trade spat turns into an all-out brawl, everyone pays at the checkout counter.
Slowing Giants and Regional Ripples
The ADB projects developing Asia’s growth will dip to 4.9 percent in 2025 and slide further to 4.7 percent in 2026, down from 5.0 percent in 2024. One key reason? China. The world’s second-largest economy is forecast to grow only 4.7 percent in 2025, and just 4.3 percent by 2026. That’s a long way from its double-digit heyday.
Even Southeast Asia, once a beneficiary of the US-China trade war, isn’t escaping the slowdown, with growth predicted to hover around 4.7 percent through 2026.
Some Sunshine in South Asia
Not all the news is gloomy. South Asia is expected to thrive, with projected growth at 6.0 percent in 2025 and 6.2 percent in 2026, thanks to strong domestic demand. Meanwhile, continued global demand for semiconductors offers a lifeline for the wider region.
Inflation is also expected to ease across developing Asia, giving central banks room to cut rates—though they may tiptoe cautiously if the US Federal Reserve keeps its own rates high.
Opinion: Walking a Fine Line
The ADB’s cautious tone feels justified. On one hand, the threat of trade barriers and geopolitical tensions looms large. On the other, pockets of resilience—like South Asia’s booming domestic markets and demand for chips—offer hope. The challenge now is balancing risk with opportunity. Because if the region stumbles, it won’t be for lack of warnings.
