India's strong growth, tech demand brighten developing Asia prospects: ADB

Strong demand for products from the region's high-tech economies and India's faster-than-expected growth have improved the outlook for developing Asia and the Pacific for this year and the next, the Asian Development Bank said on Wednesday.

Growth in 2025 is now projected at 5.1 per cent, up from the 4.8 per cent forecast in September, the ADB said in an update to its Asian Development Outlook, and higher than the 4.9 per cent projection it made when it first released the report in April.

It also raised its 2026 growth forecast for the region to 4.6 per cent from 4.5 per cent, citing reduced trade uncertainty after several U.S. deals.

The region consists of 46 economies ranging from China and India to Georgia and Samoa, but excluding Japan, Australia and New Zealand.

"While regional growth is expected to moderate next year, export strength, underpinned by the upturn in the AI and electronics cycle, will help to sustain economic activity, alongside lower trade uncertainty," the ADB said.

"Possible re-escalations of tariffs and trade policy uncertainty, and intensification of financial market volatility, remain significant downside risks for the outlook," it added.

Subregional prospects have also improved, with South Asia now expected to grow 6.5 per cent this year, up from a previous forecast of 5.9 per cent, with India beating forecasts to grow 8.2 per cent in its fiscal second quarter ending in September.

Southeast Asia is expected to expand 4.5 per cent this year, up from 4.3 per cent previously, with growth to inch up to 4.4 per cent in 2026, but the ADB said risks from global uncertainties, climate-related disruptions, and domestic political developments still remain.

Recent events underscore these vulnerabilities, with severe flooding across Indonesia, Thailand, and Malaysia in late November killing hundreds and displaced millions.

Meanwhile, fighting between Thailand and Cambodia has also reignited, with renewed border clashes and airstrikes this week, derailing a fragile ceasefire brokered by U.S. President Donald Trump after five days of warfare in July.

China's 2025 outlook edged up to 4.8 per cent from 4.7 per cent, still below Beijing's target of 5.0 per cent, while the 2026 projection remained unchanged at 4.3 per cent, reflecting the continued weakness in the country's property market.

"The persistent property sector downturn continued to weigh on activity, with a sharper decline in property investment pulling fixed asset investment down and slowing infrastructure and manufacturing investment," the ADB said.

Inflation is forecast to ease to 1.6 in 2025 from 1.7 per cent projected in September, before rising to 2.1 per cent in 2026, the ADB said.

GDP GROWTH 2024 2025 2025 2025 2026 2026 2026

JULY SEPT DEC JULY SEPT DEC

Caucasus and 5.8 5.5 5.5 5.8 5.1 4.9 5.0

Central Asia

 

East Asia 4.7 4.3 4.4 4.6 4.0 3.9 4.1

China 5.0 4.7 4.7 4.8 4.3 4.3 4.3

 

South Asia 5.9 5.9 5.9 6.5 6.2 6.0 6.0

India 6.5 6.5 6.5 7.2 6.7 6.5 6.5

 

Southeast 4.8 4.2 4.3 4.5 4.3 4.3 4.4

Asia

Indonesia 5.0 5.0 4.9 5.0 5.1 5.0 5.1

Malaysia 5.1 4.3 4.3 4.5 4.2 4.2 4.3

Myanmar -0.7 n/a -3.0 n/a n/a 2.0 n/a

Philippines 5.7 5.6 5.6 5.0 5.8 5.7 5.3

Singapore 4.4 1.6 2.5 4.1 1.5 1.4 2.1

Thailand 2.5 1.8 2.0 2.0 1.6 1.6 1.6

Vietnam 7.1 6.3 6.7 7.4 6.0 6.0 6.4

 

The Pacific 3.8 3.9 4.1 4.1 3.5 3.4 3.4

 

Developing 5.1 4.7 4.8 5.1 4.6 4.5 4.6

Asia

 

INFLATION

 

Caucasus and 6.8 7.8 7.7 8.0 6.7 6.6 7.1

Central Asia

 

East Asia 0.5 0.4 0.3 0.3 0.6 0.6 0.6

China 0.2 0.2 0.0 0.0 0.4 0.4 0.4

 

South Asia 6.5 4.4 3.7 3.3 4.5 4.7 4.7

India 4.6 3.8 3.1 2.6 4.0 4.2 4.2

 

Southeast 3.0 2.6 2.5 2.4 2.7 2.7 2.8

Asia

Indonesia 2.3 1.5 1.7 1.7 2.0 2.0 2.5

Malaysia 1.8 2.4 1.8 1.6 2.4 2.2 2.2

Myanmar 27.8 n/a 30.0 n/a n/a 23.0 n/a

Philippines 3.2 2.2 1.8 1.8 3.0 3.0 3.0

Singapore 2.4 1.0 1.0 1.0 1.2 1.2 1.2

Thailand 0.4 0.5 0.5 0.0 0.8 0.8 0.5

Vietnam 3.7 3.9 3.9 3.9 3.8 3.8 3.8

The Pacific 1.9 3.4 3.0 2.5 3.7 3.4 3.4

Developing 2.6 2.0 1.7 1.6 2.1 2.1 2.1

Asia