The Asian Development Bank (ADB) lifted its overall growth forecasts for regional economies on December 10, though expressed concern over possible negative effects from lingering trade and financial market uncertainties.

The Manila-based multilateral lender now expects its 46 member economies to expand 5.1% this year, up from 4.8% in its previous forecast in September, according to the latest edition of its “Asian Development Outlook.” For 2026, it projects that they will expand 4.6%, slightly higher than the previous 4.5% forecast, though marking a slowing from this year.

The highest revised growth rate by country and region was Vietnam, at 7.4%, up from 6.7% previously. Taiwan is now seen expanding 7.3%, up 2.2 percentage points from the earlier forecast, while Singapore will likely grow 4.1%, up 1.6 percentage points.

The upward revision for these countries and regions that heavily export technology products to the US may suggest that the impact of US President Donald Trump’s tariffs has not been that significant so far.

South Asia, which includes India, is expected to continue to lead the way on growth, with robust domestic consumption and strong export figures pushing the region ahead, according to the ADB. It forecasts growth of 6.5% this year, led by India’s expected 7.2% expansion.

But uncertainty stemming from US President Donald Trump’s so-called reciprocal tariffs continues to hamper Asia’s economic fortunes.

“Possible reescalations of tariff tensions and trade policy uncertainty, as well as elevated financial market volatility, are key concerns and could weigh on exports and investment,” the ADB said. “Sharp asset price corrections could also intensify debt vulnerabilities, triggering capital outflows and debt distress.”

The ADB said that while trade concerns have decreased following the reduction of US tariffs on China, risks remain elevated. “Uncertainty remains on other sector-specific tariffs for branded drugs and semiconductors, announced in August and September, as these measures have not been formally introduced,” the ADB said.

Still, the lender said that economic growth across developing Asia remains resilient. “Exports remained robust, bolstered by strong demand for electronics and semiconductors and export market diversification, which helped to mitigate the impact of higher US tariffs,” it said.

The ADB said that exports from high-income technology exporters rose 22% in October from the same month last year. That was underpinned by Taiwan, the world’s leading semiconductor hub, where exports skyrocketed by 49% owing to strong global demand amid the global artificial intelligence race.

Meanwhile, overall growth prospects were lifted by strong numbers from India, cushioning the blow from a slowdown in China, where a slump in the country’s property sector continues to negatively influence economic activity, “pulling fixed asset investment down and slowing infrastructure and manufacturing investment,” according to the bank.

For 2026, East Asia is expected to grow 4.1%, despite a slowing growth outlook for China at 4.3%, down from this year’s expected 4.8%. “Renewed tariff tensions and trade policy uncertainty, and higher financial market volatility, remain key risks,” the ADB said. “Geopolitical pressures and weakness in the People’s Republic of China’s property market could also weigh on the region’s growth outlook,” it added, referring to China by its official name.

Southeast Asia, meanwhile, is expected to grow 4.4% in 2026, just below this year’s 4.5% projection. But the ADB said optimism is warranted despite the marginal downgrade due to “strong third-quarter performance in Indonesia, Malaysia, Singapore, and Vietnam, despite persistent risks to growth that include climate-related disruption and domestic political developments.”

The bank added, “Southeast Asia remains resilient, with prospects depending on sustained policy support and flexible economic strategies.”

Inflation is expected to ease across the region to 1.6% this year and 2.1% in 2026, respectively, unchanged from the ADB’s previous update in September. The bank said that monetary easing cycles continued across developing Asia, as inflation rates were below or within target in 13 of the 17 inflation-targeting economies, with expectations of greater policy flexibility amid the US continuing to ease lending rates.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.