Page 12 - Policy Economic Report - July 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

respectively, from April projections—as trade uncertainty and higher U.S. tariffs affect exports and
investment.

Economies in Southeast Asia will likely be hardest hit by worsened trade conditions and uncertainty.
ADB now predicts the subregion’s economies will grow 4.2% this year and 4.3% next year, down
roughly half a percentage point from April forecasts for each year.

Bucking the downward trend are economies in Caucasus and Central Asia. The subregion’s growth
projections have been raised by 0.1 percentage points for both this year and next to 5.5% and 5.1%,
respectively, largely reflecting an anticipated boost in oil production.

Inflation in developing Asia and the Pacific is projected to continue slowing, amid easing oil prices and
strong farm output reducing food price pressures. ADB forecasts regional inflation of 2.0% this year
and 2.1% next year, compared with its April projections of 2.3% and 2.2%, respectively.

4. Global coal demand hits record 8.8 bn tonnes in 2024, to remain flat through 2026-IEA

Global coal demand reached a record high of 8.8 billion tonnes in 2024, up 1.5% from 2023, driven by
rising consumption in China, India, Indonesia, and other emerging economies, according to the
International Energy Agency (IEA).

The increase in 2024 came despite declines in advanced economies in Europe, North America, and
northeast Asia. However, the IEA said the global coal demand is expected to remain broadly
unchanged in 2025 and 2026.

In the first half of 2025, coal demand declined in China and India due to lower growth in electricity
demand and a sharp rise in renewable power generation. In contrast, coal consumption rose by
around 10% in the United States, where strong electricity demand and higher natural gas prices led
to increased coal-based power generation.

In the European Union, coal use remained broadly stable, with reduced industrial demand offset by
higher use for power generation. For the full year 2025, coal demand in China is expected to fall
slightly—by less than 1%. In the United States, it is projected to rise by around 7%, while the EU is
expected to see a decline of nearly 2%.

Global coal production is projected to increase to a new record in 2025, led by output gains in China
and India as both countries continue to prioritize energy security. However, coal production is
expected to fall in 2026 due to high stock levels and declining prices.

The IEA report said that while coal prices have dropped to levels last seen in early 2021, economic
pressure on producers remains high amid persistent oversupply.

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