ADB keeps growth outlook unchanged
According to Asian Development Outlook July 2025, the ADB lowered its growth forecasts for economies in developing Asia and the Pacific this year and next year. The downgrades are driven by expectations of reduced exports amid higher United States (US) tariffs and global trade uncertainty, as well as weaker domestic demand.
The growth outlook for South Asia for 2025 is 5.9 percent.
Pakistan secures $1 billion financing facility with ADB-backed guarantee
In Pakistan, the accelerated decline in food and non-food prices for the first 11 months of FY2025 revised the inflation forecast for FY2025 downward, while the outlook for FY2026 remains unchanged with 5.8 percent and 3 percent GDP growth.
The slight downward revisions for GDP growth in India and Sri Lanka in 2025 are primarily due to the effects of US tariff policies, while Bhutan's downward revision reflects weaker-than-expected industry performance in the first quarter of 2025. The growth forecast for the subregion in 2026 is 6.2 percent.
South Asia's inflation is forecast at 4.4 percent in 2025, from 4.9 percent in the April 2025 ADO, and retained at 4.5 percent in 2026.
India's inflation forecast for FY2025 has been revised downward to 3.8 percent, reflecting faster-than-expected decline in food prices due to better agricultural production, while the FY2026 forecast remains unchanged.
Likewise, Bangladesh's actual inflation is marginally lower than forecast for FY2025 amid easing global commodity prices and tighter monetary and fiscal policies, while the outlook keeps the FY2026 forecast the same in anticipation of continued tight policies and moderating global oil prices.
The ADB forecasts the region's economies will grow by 4.7percent this year, a 0.2 percentage point decline from the projection issued in April. The forecast for next year has been lowered to 4.6percent from 4.7percent, according to Asian Development Outlook (ADO) July 2025 released on Wednesday.
Prospects for developing Asia and the Pacific could be dented further by an escalation of U.S. tariffs and trade tensions. Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices, and a worse-than-expected deterioration in the property market of the People's Republic of China (PRC).
'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,' said ADB Chief Economist Albert Park.
'Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.'
Growth projections for the PRC, the region's largest economy, are maintained at 4.7percent this year and 4.3 percent next year. Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports. India, the region's second-largest economy, is forecast to grow by 6.5percent this year and 6.7 percent next year—down 0.2 and 0.1 percentage points, respectively, from April projections—as trade uncertainty and higher US tariffs affect exports and investment.
Economies in Southeast Asia will likely be hardest hit by worsened trade conditions and uncertainty. The ADB now predicts the subregion's economies will grow 4.2 percent this year and 4.3 percent next year, down roughly half a percentage point from April forecasts for each year.
Bucking the downward trend are economies in Caucasus and Central Asia. The subregion's growth projections have been raised by 0.1 percentage points for both this year and next to 5.5percent and 5.1percent, respectively, largely reflecting an anticipated boost in oil production.
Inflation in developing Asia and the Pacific is projected to continue slowing, amid easing oil prices and strong farm output reducing food price pressures. The ADB forecasts regional inflation of 2.0 percent this year and 2.1 percent next year, compared with its April projections of 2.3 percent and 2.2 percent, respectively.
Copyright Business Recorder, 2025
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