Foreword iv

Acknowledgments v

Definitions and Assumptions vi

Abbreviations vii

ADO September 2026—Highlights ix

PART 1

Navigating Prolonged Energy Shocks and El Niño 1

  Geopolitical and Weather-Induced Shocks Intensify Pressure on Global Energy Markets 4

  Persistent Energy Disruption Slows Growth and Sustains Inflationary Pressure 6

  Growth Outlook Remains Steady Despite Prolonged Geopolitical Headwinds 24

  Geopolitical and Weather-Induced Risks Cloud the Outlook 35

  Special Topic—El Niño 2026: Potential Physical and Economic Impacts for Asia and the Pacific 42

  Annex: Resilient Growth Despite Persistent Disruption from the Middle East Conflict 54

PART 2

Monetary Policy in High-Debt Environments 69

  1 Introduction 72

  2 Literature Review 76

  3 Sample Construction and Empirical Strategy 88

  4 Role of Debt and Fiscal Imbalances in Monetary Policy Decisions 95

  5 Debt as a Structural Constraint on Monetary Policy Transmission 100

  6 Role of Central Bank Independence and Institutional Credibility 109

  7 Summary and Policy Implications 113

  Appendixes 115

  References 121

PART 3

Economic Trends and Prospects 125

  Caucasus and Central and West Asia 127

  Developing East Asia 145

  South Asia 153

  Developing Southeast Asia 176

  The Pacific 209

PART 4

Statistical Appendix 225