The International Monetary Fund has warned that Asia faces higher vulnerability than other regions to an energy shock triggered by conflict in the Middle East. The warning highlights potential risks to growth, inflation, and external balances across the region if disruptions in oil and gas supplies persist. The outlook underscores growing concern over global economic stability.
IMF Asia-Pacific Director Krishna Srinivasan said Asian economies entered 2026 on a strong footing due to lower-than-expected US tariffs and a robust technology-driven export cycle. He noted that loose financial conditions have also supported growth momentum across the region. However, he warned that these factors are being offset by rising energy-related pressures.
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He said Asia’s heavy reliance on Middle East fuel makes it particularly exposed to supply disruptions. The region’s energy-intensive economies and limited domestic production capacity further increase its vulnerability. According to IMF estimates, net oil and gas imports account for a significant share of Asia’s GDP.
Srinivasan warned that a prolonged conflict could lead to higher inflation, weaker growth, and deteriorating current account balances. He added that in severe scenarios, Asia’s growth could fall by one to two percentage points through 2027. He also cautioned that shortages in energy-linked goods could amplify economic disruption.
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The IMF expects inflation in Asia to rise this year before easing gradually over the medium term. It advised central banks to remain flexible and monitor inflation expectations closely. Policymakers were also urged to use targeted fiscal support due to limited financial buffers after pandemic-era spending.