Middle East turmoil to keep oil prices elevated for years, dent India’s GDP growth: ADB chief economist

Prolonged tensions in the Middle East are expected to keep crude oil prices elevated well into the coming years, according to Asian Development Bank Chief Economist Albert Park, who warned that the fallout could weigh on India’s growth and push up inflation."With a higher oil price expectation, we actually have it as USD 96 per barrel as average for 2026 as per the new reference scenario. It should stay elevated at USD 80 per barrel in 2027. So, our idea is that the oil prices are likely to stay higher for longer," Park told PTI.He further explained how futures markets are now indicating sustained price pressures into next year. “We have also seen always a kind of a premium of the spot market prices and the nearby futures market because there is such a shortage currently,” he said.Park said the ongoing crisis in West Asia could reduce India’s GDP growth by 0.6 per cent in FY27, bringing it down to 6.3 per cent, while sharply increasing inflationary pressures.Earlier in April, the Asian Development Bank had projected India’s economy to grow 6.9 per cent this fiscal and 7.3 per cent in the next, supported by strong domestic demand. Inflation had been estimated at 4.5 per cent.Explaining the revised outlook, Park said: "We do find that growth would be lower by 0.6 per cent (FY27). This is based on our model scenario. But it would not negatively affect growth next year. India would kind of bounce back next."He added that inflation in India could rise by 2.4 per cent this year to touch 6.9 per cent, largely because of the country’s dependence on imported oil and gas."So that's a bit higher than the inflation impacts for the region (Asia-Pacific), because India is more reliant on imported oil and gas. The growth effect, if you take out China, this negative 0.6 per cent on growth this year is pretty similar to the region as a whole region as well," he said.In a special update released on April 29, ADB cut its 2026 growth forecast for the Asia-Pacific region to 4.7 per cent from 5.1 per cent, citing the impact of extended disruptions in West Asia.Park also flagged concerns over the possible effects of El Niño and rising fertiliser costs on food production and prices."Of course, it's very uncertain. Obviously, whenever there's a bad harvest in India, we have an issue. With higher prices. India accounts for a huge part of the global trade in rice. So then whatever happens in India also often has a big impact on other countries," he said.He added that rising fertiliser prices could force farmers to cut usage, reducing crop yields and tightening food supplies later in the year.