Developing Asia’s growth is set to slow more than previously expected this year and next, as the region absorbs the fallout from sweeping U.S. tariffs on all trading partners, the Asian Development Bank (ADB) said in its latest economic outlook released Tuesday.
The bank now projects growth of 4.8% across its 46 developing member economies in 2025, and 4.5% in 2026. Both figures are slightly lower than the forecasts in April, revised down by 0.1 and 0.2 percentage points respectively.
ADB Chief Economist Albert Park told reporters that the trade war had left no winners. “We have seen exports from China to the U.S. decline, and those exports have been replaced somewhat by exports from Southeast Asia or other parts of Asia. So in that sense, there perhaps has been some benefit because of China’s tariff exposure,” Park said.
According to the ADB, developing Asia—and China in particular—has been hit harder than other regions by trade frictions. Effective tariffs on the region are 28.1 percentage points higher than rates set under World Trade Organization rules or free trade agreements, and well above the excess tariffs the U.S. imposes on countries outside Asia.
Despite this pressure, exports across the region rose 8.1% in the first half of 2025, partly due to U.S. importers stockpiling ahead of new tariffs. Taiwan stood out with 20% export growth in the first quarter, driven by global demand for AI server chips.
The outlook, however, diverges sharply across economies. Southeast Asia saw the steepest downgrade, with growth now forecast at 4.3% in both 2025 and 2026, compared to 4.7% previously. Thailand’s expansion is expected at just 2% this year and 1.6% next, while Malaysia is set for 4.3% and 4.2%. Cambodia is projected at 4.9% this year and 5% in 2026. Vietnam is the exception, with growth raised slightly to 6.7% this year.
China’s growth forecast remains unchanged at 4.7% in 2025 and 4.3% in 2026, while India’s was trimmed to 6.5% for both years. Taiwan’s outlook has improved markedly for this year—upgraded to 5.1% from 3.3%—but is expected to slow to 2.3% next year.
South Korea has been hit hardest by sector-specific tariffs, with U.S. duties of 25% on autos and auto parts and 50% on aluminum and steel cutting into its growth prospects.
The ADB warned that unresolved U.S.-China trade tensions, combined with tariffs on semiconductors, pharmaceuticals, and the threat of further increases, continue to pose major risks to Asia’s economic trajectory.
