The United Nations has warned that economic growth across Asia-Pacific developing economies is set to weaken in the coming years, as rising inflation, geopolitical tensions, and global energy disruptions weigh heavily on the region’s outlook.
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According to the latest United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) report, the region’s growth is projected to slow to 4.0% in 2026, down from 4.6% in 2025, while inflation is expected to climb to 4.6% from 3.5%. Despite the slowdown, Asia-Pacific is still expected to remain the fastest-growing developing region globally.
The report highlights that surging food and energy prices, combined with weakening global demand, are placing increasing pressure on households and businesses across the region. Rising geopolitical instability, particularly tensions in the Middle East, has further disrupted global trade routes and energy supply chains, adding uncertainty to economic forecasts.
United Nations Secretary-General António Guterres warned that dependence on fossil fuels continues to expose the global economy to shocks, noting that conflicts can rapidly translate into energy crises and inflation spikes worldwide.
The report also cautioned that low-income households and low-skilled workers remain the most vulnerable to rising living costs, as many countries in the region lack strong social protection systems. At the same time, high public debt levels and potential interest rate increases could limit governments’ ability to respond to future economic shocks.
In response to these challenges, UN ESCAP called for a shift away from export-dependent growth models toward stronger domestic and regional demand. It emphasized the need for productivity gains, improved financial access, enhanced digital and physical infrastructure, and deeper regional cooperation to reduce exposure to global economic fragmentation.
Energy transition remains a central focus of the report, with a strong push toward renewable energy adoption to reduce reliance on fossil fuels. However, the UN warned that poorly managed transitions could lead to unintended consequences, including inflationary pressure, fiscal strain, and widening inequality.
The report recommended gradual subsidy reforms, increased private sector investment in green infrastructure, and stronger international support for least developed and small island economies to ensure a balanced transition.
It also stressed that successful reform depends not only on economic policy but also on public acceptance, urging governments to carefully design and communicate measures such as carbon pricing and ensure transparent use of revenues.
