Reduced Economic Growth Projection for Asia-Pacific by ADB
In its July 2025 Asian Development Outlook (ADO) report, the Asian Development Bank (ADB) has revised downward its growth projections for economies in the Asia-Pacific region. The report cites rising trade uncertainty, higher U.S. tariffs, and geopolitical risks as key factors influencing these revisions.
Moderate Growth Amid Cautious Outlook
The ADB projects economic growth for developing Asia and Pacific economies at 4.7% in 2025 and 4.6% in 2026. These projections represent a downward revision from earlier forecasts.
The region's largest economy, the People's Republic of China (PRC), is forecast to grow by 4.7% this year and 4.3% next year, with growth projections for India slightly lowered to 6.5% this year and 6.7% next year.
Southeast Asia Hardest Hit
Economies in Southeast Asia are likely to be hardest hit by worsened trade conditions and uncertainty. Growth projections for the subregion have been lowered by roughly half a percentage point for both this year and next. The slowdown is expected to be particularly pronounced, with growth in Southeast Asia forecast at about 4.2% in 2025, the steepest downward revision among subregions.
Sector-Specific Vulnerabilities and Inflation Easing
The Pacific subregion’s growth is forecast at 3.9% in 2025 but is revised down to 3.5% in 2026, largely due to an expected decline in visitor arrivals impacting tourism-dependent economies. Inflation across developing Asia and the Pacific is expected to moderate to around 2.0% in 2025 and 2.1% in 2026, helped by stronger agricultural output and lower oil prices.
Risks and Uncertainties
Escalating trade tensions, geopolitical instability, and potential sharper deterioration in China’s property market remain significant downside risks that could further reduce growth. Manufacturing Purchasing Managers’ Indexes (PMIs) show worsening activity in half of the surveyed regional economies as of June 2025, signaling a slowdown likely continuing through 2025.
The ADB's Role
The ADB is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. The bank is owned by 69 members, 50 of which are from the region. The ADB's July 2025 Asian Development Outlook report released these forecasts.
In summary, while developing Asia and Pacific economies maintain moderate growth, the 2025 forecasts reflect a cautious outlook amid external trade shocks and geopolitical risks suppressing export growth and domestic momentum. The ADB's report serves as a reminder of the challenges facing the region and the importance of continued cooperation and support to promote economic stability and resilience.
[1] Asian Development Bank. (2025). Asian Development Outlook 2025. Retrieved from https://www.adb.org/publications/asian-development-outlook-2025
[2] Asian Development Bank. (2025). Press Release: ADB Lowers Growth Forecasts for Asia-Pacific Economies. Retrieved from https://www.adb.org/news/adb-lowers-growth-forecasts-asia-pacific-economies
[3] Trading Economics. (2025). Manufacturing PMI in Asia. Retrieved from https://tradingeconomics.com/asia/manufacturing-pmi
[4] World Bank. (2025). East Asia and Pacific Economic Update, June 2025. Retrieved from https://www.worldbank.org/en/region/eastasiaandpacific/publication/east-asia-and-pacific-economic-update-june-2025
In the context of the ADB's July 2025 Asian Development Outlook report, concerns about business growth are heightened due to factors such as rising trade uncertainty, higher U.S. tariffs, and geopolitical risks, which have led to a downward revision in growth projections. To finance this cautious outlook, the ADB is observing moderately growing economies in developing Asia and the Pacific, with the region's largest economies, like China and India, showing signs of resilience despite slight lowered growth projections.
