ADB president: Middle East and AI Fuel Uncertainty in Global Economy

Asian Development Bank (ADB) President Masato Kanda cautioned during a lecture in Tokyo that the global economic landscape is becoming increasingly uncertain due to tensions in the Middle East and the rapid advancement of artificial intelligence. During a speech at the Yomiuri International Economic Society (YIES) in Tokyo, Kanda highlighted the pressing need for international cooperation in addressing various challenges.

He noted that rising energy prices, primarily caused by the deteriorating situation in the Middle East, are leading businesses to pass costs onto consumers through products and services. Consequently, ADB projections indicate a significant increase in inflation rates for emerging countries in the Asia-Pacific region, with a projected rise of 1.3 percentage points from the previous year.

Simultaneously, their GDP growth rates are expected to decline by 0.6 points. To counter these challenges, the ADB is considering measures such as lifting the ban on funding for nuclear power generation initiatives and expanding loans to private enterprises. Kanda emphasized the importance of bold reforms in response to the rapid changes occurring worldwide.

He pointed out that Japan's share of the Asia-Pacific region's GDP has dropped from over half in 2000 to approximately 10% in 2025, primarily due to the rise of China and India. Kanda noted that Japan is no longer considered a superpower and urged the country to enhance its productivity and promote economic renewal. Concerning the weakening yen trend in the market, Kanda stated that a currency's exchange rate ultimately reflects its country's national strength, underscoring the necessity for Japan to bolster its competitiveness to protect its external purchasing power. This requires implementing structural reforms in the labor market and other sectors.