West Asia Conflict Could Lower Growth In Developing Asia And Pacific: ADB

MANILA, March 26 (Bernama-Xinhua) -- The conflict in West Asia could lower economic growth in developing Asia and the Pacific by up to 1.3 percentage points over 2026 to 2027 and raise inflation by 3.2 percentage points if energy market disruptions last over a year, noted an Asian Development Bank report released Thursday, reported Xinhua.

The conflict impacts economies in Asia and the Pacific through higher energy prices, supply chain and trade disruptions, and tighter financial conditions. Tourism and remittances could also be impacted.

An ADB brief outlines three risk scenarios, indicating that effects on the region's developing economies will depend largely on the duration of disruptions.

Under a short-lived conflict, energy price pressures would ease relatively quickly. More prolonged disruptions would lead to larger and more persistent impacts on growth and inflation.

Adverse effects on growth will be most severe in developing Southeast Asia and the Pacific, with inflation rising the most in South Asian economies.

"Governments should focus on containing market stress and protecting the most vulnerable, while adopting policies to improve longer-term resilience," said ADB Chief Economist Albert Park.

The report advocates that policies should focus on stabilising rather than suppressing price signals; fiscal support should be targeted and time-bound; central banks should prioritise limiting excessive market volatility while closely monitoring inflation expectations; and governments should curb energy demand where feasible.

--BERNAMA-XINHUA