Growth in Asia-Pacific region likely to moderate to 4.1% in 2026: Moody's
Moody's in its latest report has said that the growth in the Asia-Pacific (APAC) region is likely to moderate to 4.1 per cent in 2026 from 4.3 per cent in 2025 and further to slow down to 3.6 per cent in 2027, amid high commodity prices, tighter policy settings, and unusually hot and dry weather. However, it is expecting India to remain one of the fastest-growing major economies in the Asia-Pacific region, even as higher oil prices, fresh US tariffs and slowing global growth pose risks to the outlook.
As per the report, the Asia-Pacific economy has dodged the sharp slowdown that many feared the West Asia conflict would provoke. Further, the artificial intelligence boom has driven robust export and investment growth, accelerating overall GDP growth across much of the region. It said the West Asia conflict remains on a knife-edge and the Strait of Hormuz's full reopening looks set to be a long process, punctuated by setbacks.
Moody's said the West Asia conflict has driven up inflation across Asia in the past few months and the resurgence in inflation has put central banks in the hot seat. It further said that another key risk is the developing El Nino weather pattern, which looks set to bring hotter and drier conditions to much of the region in the second half of the year. Lower rainfall could reduce crop yields and hurt food supplies, particularly if conditions prove more severe than anticipated and countries are underprepared. The report noted that El Nino poses a dual risk of food and energy vulnerability for India.
