Source: United Nations (video statements)
A new UN report warned that the Asia-Pacific region’s economic outlook is under pressure from rising tensions and prices.
Today (20 Apr), at the launch of the report, Economic and Social Survey of Asia and the Pacific, Hamza Malik, Director of the Macroeconomic Policy and Financing for Development Division at ESCAP, said, “Asia Pacific remains the engine of global economic growth, so more than half, or about 53.4 percent of growth is expected to come from Asia Pacific region. So, whatever happens in Asia Pacific matters for the rest of the world.”
The ongoing conflict in the Middle East is adding fresh pressure to the economic outlook of Asia and the Pacific, disrupting energy and commodity markets and trade and connectivity routes at a time of already high global economic uncertainty, according to a new United Nations report.
The 2026 edition of the Economic and Social Survey of Asia and the Pacific, published by the Economic and Social Commission for Asia and the Pacific (ESCAP), highlights that rising energy and food prices, along with weaker global demand, are dimming economic growth prospects and increasing the cost of living across the region.
Low-skilled workers and low-income households are particularly vulnerable, as they are more exposed to rising living costs and have limited access to social protection.
High public debt vulnerabilities and a likely increase in interest rates due to higher inflation expectations may constrain the ability of Governments to respond to the latest economic shocks.
ESCAP is projecting, although with considerable uncertainty, that developing economies in the region will grow by an average of 4 percent in 2026, down from 4.6 percent in 2025, and inflation will rise to an average of 4.6 percent in 2026, up from 3.5 percent in 2025, reversing recent gains in inflation stability.
Despite this moderation, the region is expected to remain the fastest-growing developing region globally.
However, sustaining this performance will require a gradual shift from a primarily export-driven growth approach towards stronger domestic and regional sources of demand.
Key priorities in this regard include boosting productivity, expanding social protection, improving access to finance, and strengthening digital and physical connectivity across the region. Deeper regional cooperation will be critical to offset the effects of global economic fragmentation.
The ongoing global energy crisis is yet another wake-up call for Asia and the Pacific to strengthen energy resilience, including through homegrown renewable energy.
An energy transition could help reverse years of regression in Sustainable Development Goal 13 on climate action.
However, in the report, ESCAP cautions that transition policies must be carefully designed to avoid unintended socioeconomic consequences.
Measures to reduce reliance on fossil fuels, expand renewable energy and improve energy efficiency could increase inflation, weaken fiscal positions, increase poverty and widen income inequality if not implemented in a calibrated and consultative manner.
In the report, ESCAP also finds that economic policy issues are still only weakly integrated into most national transition strategies. Policy choices need to reflect country-specific conditions.
A gradual fossil fuel subsidy cut would help cushion people’s purchasing power, especially where fiscal support to mitigate higher energy prices is constrained.
Meanwhile, countries with deeper financial markets can mobilize private capital for green investment.
Many least developed countries and small island developing States will require stronger international support to ensure access to affordable and reliable energy.
According to the report, political economic insights can further support these efforts.
For example, Governments can time energy transitions when political popularity is high, while creating new beneficiaries in renewable energy sectors to help to sustain the reform momentum.
Furthermore, the report highlights how behavioural insights can boost policy uptake, such as increasing the adoption of low-carbon technologies through peer comparisons or improving public acceptance of carbon pricing when revenues are used transparently and equitably.