ADB president warns Asia-Pacific inflation could persist and worsen
Higher borrowing costs are adding to repayment pressures on developing nations, while the bank forecasts regional growth of 5.0% in 2026.
- Asian Development Bank (ADB) President Masato Kanda has warned that inflation in the Asia-Pacific region could persist and potentially worsen.
- Key risks identified as driving inflation include sharply higher energy prices from Middle East turmoil, a worsening El Niño, and severe natural disasters related to climate change.
- The warning comes as developing nations in the region also face mounting pressure from debt repayments, particularly for dollar-denominated debt.
Asia and the Pacific risk prolonged, worsening inflation, while developing nations face mounting debt repayment pressures, Asian Development Bank (ADB) President Masato Kanda has told Jiji Press.
The bank forecasts economic growth of 5.0% for the region’s emerging economies in 2026, compared with the 5.5% recorded in 2025.
For developing countries carrying substantial dollar-denominated debt, increases in long-term interest rates, mainly in developed economies, have made repayments more burdensome, Kanda explained.
“Developing nations are facing heightened inflation risks amid rising energy prices and transportation costs, as well as concerns over fiscal sustainability,” he added.
Warning that regional inflation could “continue and even deteriorate further”, Kanda identified sharply higher energy prices resulting from Middle East turmoil, a worsening El Niño and increasingly severe natural disasters linked to climate change as key risks.
“The global economy is facing unprecedented uncertainty,” he told the news agency.
Kanda is visiting Bangkok, Thailand, to attend the ongoing 2026 Annual Meetings of the International Monetary Fund and the World Bank Group.
On Japan’s economic and fiscal management, he argued that maintaining sound macroeconomic policy was extremely effective for any country, calling it the “best weapon” against speculators.
He also advocated a “timely interest rate adjustment” to help protect Japan’s economy.
Kanda previously served as Japan’s vice-minister of finance for international affairs.
His oversight of massive yen-buying interventions in foreign exchange markets earned him the nickname “Mr. Yen of the Reiwa era”.
After stepping down as Japan’s top finance diplomat, he became president of the Manila-based multilateral development bank in February 2025.
He will begin his second term in November 2026.
The ADB has also provided US$5.6 billion in financial support, with Asian countries heavily reliant on the Middle East for supplies of crude oil and natural gas.
“As world leaders are keenly aware of the importance of energy security, we have the opportunity to promote reforms, including strengthening resilience through regional cooperation,” Kanda said.
Looking ahead to the ADB’s next annual meeting in Nagoya, central Japan, in May 2027, he expressed hope that the gathering would encourage more Japanese companies to expand into Asia.
The meeting “will be a very important opportunity for international cooperation at a time when the world is turning inward and societies within countries are becoming more divided”, he said.
[Copyright The Jiji Press, Ltd.]
