The Asian Development Bank (ADB) released a report on Wednesday indicating that increased US tariffs and prevailing trade uncertainties have negatively impacted the economic outlook for developing Asia and the Pacific. Consequently, the bank has revised down its growth forecasts for the region for both the current and upcoming year.
According to the Asian Development Outlook report, a weakening of domestic demand is anticipated across the region. This weakening is attributed to various compounding factors, including geopolitical tensions, disruptions in supply chains, escalating energy prices, and persistent uncertainty within China’s property market.
The ADB has adjusted its 2025 growth forecast for the region downwards to 4.7%, a reduction from the 4.9% projection made in April. Similarly, the forecast for 2026 has been trimmed to 4.6%, down from its earlier estimate of 4.7%.
Albert Park, ADB Chief Economist, commented, “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.”
Among the subregions, Southeast Asia is projected to experience the most significant deceleration in growth, with revised forecasts now standing at 4.2% for 2025 and 4.3% for 2026, a decrease from the prior projections of 4.7% for both years.
Park urged that “Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.”
The ADB’s definition of developing Asia and the Pacific encompasses 46 economies, spanning from China to Georgia to Samoa, while explicitly excluding countries such as Japan, Australia, and New Zealand.
These updated forecasts were announced shortly after US President Donald Trump revealed that the United States and Japan had reached a trade agreement. This deal includes a 15% tariff on Japanese exports, a lower rate than the previously threatened 25%. Furthermore, Trump also announced a new 19% tariff rate for goods originating from the Philippines, which is below the 20% levy flagged earlier this month but still exceeds the 17% rate announced in April.
President Trump’s administration has significantly altered global trade flows by imposing tariffs on nearly every trading partner. Almost all countries are currently facing a 10% tariff that came into effect in April, with many also anticipating steep additional tariffs from August.
