Samarkand, UZBEKISTAN — Central bank and finance chiefs from across the Association of Southeast Asian Nations (ASEAN), China, Japan, and South Korea are bracing for slower economic growth and higher inflation risks amid a prolonged war in the Middle East.

In a joint statement on Sunday, May 3, following the 29th ASEAN+3 Finance Ministers’ and Central Bank Governors’ Meeting here, the region’s top economic officials said the region entered 2026 from a position of relative strength but now faces significantly heightened downside risks due to escalating geopolitical tensions.

The grouping—comprising the 11 ASEAN member states, now including Timor-Leste, along with the three East Asian countries—said stronger-than-expected growth in 2025, low inflation, and improved external buffers had supported the region’s resilience at the start of the year.

However, officials warned that the ongoing conflict in the Middle East is expected to weigh on the outlook, with growth likely to moderate and inflation forecast to rise due to higher oil and gas prices, tighter global financial conditions, and renewed volatility in capital flows and exchange rates.

They noted that the extent of the impact will depend on the duration of the conflict, as well as member economies’ exposure to imported energy and key commodities, available buffers, and domestic policy space.

“If prolonged, the shock could become broader and more persistent, extending beyond energy markets to industrial inputs, logistics, food prices, tourism, and remittances,” the joint statement read.

Against this backdrop, ASEAN+3 public finance and central bank chiefs emphasized the need to strengthen regional cooperation and uphold multilateralism to manage growing uncertainty.

They reaffirmed their commitment to sustained policy dialogue to safeguard macroeconomic and financial stability, while remaining vigilant against excessive volatility in financial markets and shifts in global liquidity conditions.

The group also pledged to maintain open and well-functioning trade and investment flows, support resilient supply chains, and uphold a rules-based multilateral trading system anchored on the World Trade Organization (WTO).

Officials highlighted ongoing regional efforts to strengthen energy security and supply chain resilience, including Japan’s recently launched Partnership on Wide Energy and Resources Resilience (POWERR Asia).

They also reiterated the importance of regional financial safety nets, pointing to mechanisms such as the Chiang Mai Initiative Multilateralization (CMIM) and ASEAN+3 Macroeconomic Research Office (AMRO) in enhancing surveillance, crisis preparedness, and financial stability.

In a presentation before ASEAN+3 central bank governors and finance ministers, Asian Development Bank (ADB) president Masato Kanda said the region’s economic outlook has deteriorated further as the conflict persists.

Kanda noted that earlier projections of a brief conflict had not materialized, prompting a downward revision in growth expectations.

He said the ADB now expects ASEAN+3 growth to slow more sharply to 3.7 percent in 2026 from 4.3 percent in 2025, while inflation is projected to rise to 2.6 percent this year from 0.9 percent last year.

“ASEAN+3, as well as other economies in Asia and the Pacific, depend heavily on energy imports flowing through the Gulf. That is why our region’s exposure is acute,” he pointed out.

In response, the ADB has rolled out a financial support package to help developing member countries cope with the economic and financial fallout from the conflict, Kanda said.

The package includes fast-disbursing budget support through expanded policy-based lending, the use of the Countercyclical Support Facility to protect vulnerable households, and the Trade and Supply Chain Finance Program to ensure the continued flow of essential goods such as energy and food, he added.

The ADB has also reactivated support for oil imports on an exceptional basis and introduced a mechanism allowing countries to repurpose existing sovereign portfolio funds within 24 hours of a crisis, according to Kanda.

Beyond immediate response measures, Kanda said the ADB will deepen its role in strengthening regional resilience, including assuming the secretariat role for the ASEAN+3 Disaster Risk Finance Initiative starting August and continuing efforts to develop regional capital markets and financing mechanisms.

“The ADB stands with you—fully committed and ready to act,” Kanda said.