Energy shocks, trade disruptions may dent outlook
The ongoing conflict in the Middle East poses a significant risk to the macroeconomic outlook of Asia and the Pacific, with potential spillovers through energy markets and trade disruptions. The Asian Development Bank warns that a prolonged conflict could reduce growth in the region by 1.3 percentage points and raise inflation by 3.2 percentage points over 2026-2027.
The Asian Development Bank has identified the Middle East conflict as a key risk to Asia and the Pacific's macroeconomic outlook. The region's dependence on imported energy and integration with global trade systems makes it vulnerable to spillovers. A prolonged conflict could reduce growth and raise inflation. The conflict has already triggered sharp volatility in energy markets, with oil prices surging to nearly $120 per barrel. The bank warns of broader supply chain risks and financial market stress. It advises policymakers to safeguard macroeconomic stability and accelerate energy diversification.
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