2025 APAC growth projected at 4.7%; India to expand at 6.5%: ADB
Inflation across developing APAC is projected to ease, supported by falling oil prices and strong agricultural output. Inflation there is forecast at 2 per cent in 2025 and 2.1 per cent in 2026, down from April's projections of 2.3 per cent and 2.2 per cent respectively.
China is expected to grow at 4.7 per cent in 2025 and 4.3 per cent in 2026, with consumer and industrial stimulus partially offsetting the drag from real estate and export weakness.
APAC growth is projected at 4.7 per cent in 2025â€'down by 0.2 pp from Aprilâ€'and 4.6 per cent in 2026â€'down by 0.1 pp, the ADB Asian Development Outlook said. China is expected to grow at 4.7 per cent in 2025 and 4.3 per cent in 2026. India is forecast to grow at 6.5 per cent in 2025 and 6.7 per cent in 2026. ADB revised down its forecast for Vietnam's growth to 6.3 per cent in 2025 and 6 per cent in 2026.
India is forecast to expand at 6.5 per cent in 2025 and 6.7 per cent in 2026, slightly lower than previous estimates due to trade uncertainty and US tariffs impacting exports and investment.
Southeast Asia is anticipated to be hit the hardest, with growth revised down to 4.2 per cent in 2025 and 4.3 per cent in 2026, a 0.5 pp reduction from April's projections.
In contrast, Central Asia and the Caucasus are projected to grow faster than previously expected, with growth revised up to 5.5 per cent in 2025 and 5.1 per cent in 2026, driven largely by higher oil production.
ADB revised down its forecast for Vietnam's gross domestic product (GDP) growth to 6.3 per cent in 2025 and 6 per cent in 2026, down by 0.3 and 0.5 percentage points respectively from its projection made three months back.
The downgrade is largely attributed to weaker export prospects amid rising US tariffs and global trade uncertainties, coupled with softening domestic demand, the bank said in the document.
Despite short-term challenges, Vietnam's economy will remain resilient this year and the next, ADB experts believe.
Strong export and import growth, along with a surge in foreign investment disbursement, drove economic performance in the country in the first half (H1) this year, according to the bank.
Foreign direct investment (FDI) commitments rose by 32.6 per cent, while FDI disbursement increased by 8.1 per cent year on year (YoY) during H1 2025 in Vietnam, indicating growing international confidence in the country's economic outlook, ADB noted.
Public investment disbursement has also hit its highest level in the country since 2018, meeting 31.7 per cent of the yearly plan in H1 2025—up by 19.8 per cent YoY.
However, a recently announced trade agreement with the US in early July imposes significantly higher tariffs on Vietnamese exports, which could reduce demand in H2 2025 and in 2026, ADB noted.
The country's purchasing managers' index (PMI) for manufacturing has witnessed a slowdown since late 2024, suggesting mounting pressure on the industrial sector.
Inflation in Vietnam is expected to ease to 3.9 per cent in 2025 and 3.8 per cent in 2026, ADB said.
Rising risks to the APAC regional outlook include escalating geopolitical tensions and supply chain disruptions, higher energy prices, and a deeper-than-expected downturn in China's property market.
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