Asian Development Bank Warns of Persistent Inflation Through 2027

The Asian Development Bank (ADB) warns that inflation pressures across the developing Asia-Pacific region will persist into 2027, driven by conflicts in Europe and the Middle East and severe El Nino weather patterns. In its September 2026 Asian Development Outlook, the bank forecasts growth in developing Asia and the Pacific will moderate to 5 percent this year from 5.5 percent in 2025, before rising to 5.1 percent in 2027.

Inflation is projected at 4.2 percent this year and 3.5 percent next year, both exceeding the 3 percent seen in 2025. The ADB notes that fighting in Iran and Yemen has restricted crude and refined product supplies, while the war in Ukraine continues to disrupt grain shipments. Simultaneously, a record-strong El Nino threatens rice yields in the Philippines and Vietnam and reduces hydropower generation. These factors may force economies including Bangladesh, India, Indonesia, Pakistan, the Philippines, and Vietnam to implement further monetary tightening, with rate cuts potentially delayed until 2027.

Offsetting these pressures is an artificial intelligence boom that has surged technology exports and investment, particularly for semiconductor and data center hardware producers in Malaysia, Thailand, and Vietnam. S&P Global Ratings also raised its baseline GDP growth projection for the region to 4.6 percent for this year, citing AI-related investments and strong domestic consumption in India, Indonesia, Malaysia, and Taiwan. However, S&P economists warned of overconcentration risk, as initial AI capital expenditure has been driven by a small group of U.S. hyperscalers.