The Asian Development Bank trimmed its 2025 growth forecast for developing Asia to 4.8% from 4.9%, citing the impact of steep U.S. tariffs, and warned that momentum will slow further next year.
From a (gated) Wall Street Journal article, in brief.
ADB said the region now faces an average effective tariff rate more than 28 percentage points higher than under WTO or free-trade agreements. India was hit with the sharpest downgrades, with its fiscal 2025 growth forecast cut to 6.5% from 6.7%.
Chief Economist Albert Park said tariffs have reached historically high levels and trade uncertainty remains at record highs. He noted that while front-loading of exports and booming AI demand helped support growth in the first half of 2025, the broader impact of U.S. policy is reshaping global trade and weighing on Asia’s outlook.
ADB now projects developing Asia—which includes 46 economies from China to South Korea—will grow 4.8% in 2025, down from April’s 4.9% forecast and the 5.1% pace in 2024. Growth is expected to slow further to 4.5% in 2026, compared with 4.7% previously projected.
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Market implications:
FX: Tariff-driven growth downgrades could weigh on regional currencies, particularly INR and CNY.
Equities: Asian export-driven stocks may face pressure as ADB signals tariff headwinds.
Rates: Slower growth outlook could give policymakers scope for further monetary easing.