The ongoing Middle East conflict, including a US-Iran standoff and port blockades, has triggered an energy shock with elevated oil prices near USD100/bbl, pushing inflation higher and widening trade gaps across Asia-Pacific economies. Asia entered 2026 resiliently despite prior trade tensions, but the war tests this strength, limiting policy responses especially in fuel-import-dependent nations. Regional FX like CNY and SGD shows resilience amid solid exports and policy support, while trade shifts favor ASEAN and AI-related growth from Taiwan and South Korea. IMF and ADB highlight rising risks to growth leadership, urging reforms for energy resilience and vulnerable populations.
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