MANILA - The Asian Development Bank (ADB) on Wednesday downgraded its economic growth outlook and raised inflation projections for developing Asia and the Pacific due to severe and prolonged disruptions from the conflict in the Middle East.

The ADB forecasts regional growth at 4.7 percent in 2026 and 4.8 percent in 2027, down from the 5.1 percent forecast for both years in early April, based on an assumption of earlier stabilization of the situation in the Middle East.

ALSO READ: MDBs to support countries amid global energy uncertainty, says ADB

The bank projected the inflation in the region to accelerate to 5.2 percent this year from 3 percent last year, before easing to 4.1 percent in 2027. While the early April forecast predicted a 3.6 percent inflation in 2026 and 3.4 percent in 2027.

The new outlook assumes that oil prices average around $96 per barrel in 2026 and will ease to around $80 per barrel in 2027, both above the pre-conflict average of $69 per barrel in January and February this year.

READ MORE: Asia growth outlook diverges

Under an even more severe downside scenario of renewed conflict escalation, in which oil prices spike in May 2026 and remain even higher, growth in developing Asia and the Pacific could slow to 4.2 percent this year and 4 percent next year, while inflation could reach 7.4 percent in 2026.

The bank said continued risks to energy production and transport routes, alongside sustained pressure on oil and gas prices, will particularly affect economies heavily dependent on imported fuel, remittances, tourism or external financing. It added that the disruptions to global energy and trade networks could be long-lasting, not just temporary volatility.