Presented in order of reliance on Middle Eastern oil, we examine how these economies are equipped to cope with near-term shocks and longer-term pressures.
The war involving Iran has raised concerns that Asia will be among the hardest-hit regions, due to its dependence on imported energy. Consumers are already feeling the impact through higher fuel and electricity prices. Looking ahead, however, the economic fallout will vary sharply across countries, reflecting differences in energy security, policy tools and underlying economic strength.
Countries that are better positioned can focus on cushioning the pass-through of higher energy prices and anchoring inflation expectations. Others, with weaker oil reserves and less economic flexibility, face tougher choices as they seek to limit the drag on economic growth. Within Asia, we see Japan and China as relatively more resilient in managing medium term risks linked to the energy shock. Singapore, South Korea and Malaysia also retain meaningful flexibility, either through access to oil and/or strong policy and economic levers. In contrast, the Philippines, Thailand, India and Indonesia appear more exposed, with higher sensitivity to prolonged energy-driven pressures.
