UNITED NATIONS, April 20 (Xinhua) -- 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 UN report released at the UN headquarters on Monday.
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), highlighted 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.
ESCAP projected 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 toward 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 report said.
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, while 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, it added.
"Policymakers are navigating rising global trade protectionism, economic policy uncertainty and geoeconomic fragmentation. Their eventual impact would be disproportionate for countries with smaller room for policy support and for people having limited access to social protection," UN Under-Secretary-General and Executive Secretary of ESCAP Armida Salsiah Alisjahbana said in the preface of the report.
The ongoing global energy crisis is another wake-up call for the region 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, the report said.
"This is especially critical today, as we witness in real time the effects of a dependence on fossil fuels, where every conflict risks sending shockwaves through the global economy," said UN Secretary-General Antonio Guterres in his foreword for the report, underscoring that the Asia-Pacific region "has long been a global growth engine, marked by economic resilience, steady growth prospects and innovative economies."
In the report, ESCAP cautioned 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.
ESCAP also found that economic policy issues are still only weakly integrated into most national transition strategies, and suggested that policy choices need to reflect country-specific conditions.
