TAIPEI (Taiwan News) — The Asian Development Bank forecasts Taiwan’s GDP will grow 7.6% this year, the highest among advanced economies in the Asia-Pacific.

According to the ADB’s Asian Development Outlook for April, if the Iran War extends into the third quarter, growth forecasts for developing Asia and the Pacific could be revised further downward, per AFP. Growth in the Asia-Pacific region could fall to 4.7% this year and 4.8% next year.

The ADB said that growth prospects for most developing economies in the Asia-Pacific will deteriorate over the next two years. Chief Economist Albert Park noted that the region, as a net energy importer, is especially vulnerable to spillover effects from conflict.

The report, completed in March, said that if tensions in the Middle East stabilize early, inflation in developing Asia is expected to reach 3.6% this year and 3.4% next year. However, if the conflict escalates, inflation could surge to as high as 5.6% this year.

The ADB classifies Taiwan, Japan, South Korea, Singapore, Hong Kong, Australia, and New Zealand as advanced Asia-Pacific economies under a revised framework reflecting development levels. This grouping is intended to better capture economic conditions across the region.

Strong external demand for semiconductor exports helped drive Taiwan’s GDP growth close to historic highs last year. Despite geopolitical risks, continued global demand for artificial intelligence and a recovery in domestic consumption are expected to sustain solid growth.

Among advanced Asia-Pacific economies, Taiwan is projected to post the fastest growth at 7.6%, followed by Singapore at 3%. Hong Kong is forecast at 2.6%, Australia at 2%, South Korea and New Zealand at 1.9%, and Japan at 0.7%.

China’s economic growth is projected to slow to 4.6% this year and 4.5% next year. The report attributed the slowdown mainly to a prolonged downturn in the property sector and weakening export growth.