IMF Warns Asia Vulnerable to War-Induced Energy Shocks
The International Monetary Fund (IMF) has warned that Asia is significantly more vulnerable to energy shocks than other regions due to its heavy reliance on Middle East fuel. Krishna Srinivasan, director of the IMF's Asia-Pacific department, stated that while Asian economies entered 2026 with solid growth driven by strong tech exports and lower U.S. tariffs, the ongoing conflict in the Middle East poses acute risks. Asia's energy-intensive economy uses oil and gas amounting to about 4% of its GDP, nearly double Europe's share. The IMF projects that a prolonged war could trigger supply shortages and price spikes, leading to higher inflation and weaker growth. Under adverse scenarios, Asia's growth could drop by 1 to 2 percentage points cumulatively through 2027. Inflation is expected to rise to 2.6% in 2026 before easing. The IMF advises Asian central banks to remain agile in monetary policy and policymakers to provide targeted fiscal support, given limited buffers after pandemic spending. The region's net oil and gas imports account for approximately 2.5% of GDP, highlighting its exposure to external supply disruptions.
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IMF Warns Asia Vulnerable to War-Induced Energy Shocks
The International Monetary Fund (IMF) has warned that Asia is significantly more vulnerable to energy shocks than other regions due to its heavy reliance on Middle East fuel. Krishna Srinivasan, director of the IMF's Asia-Pacific department, stated that while Asian economies entered 2026 with solid growth driven by strong tech exports and lower U.S. tariffs, the ongoing conflict in the Middle East poses acute risks. Asia's energy-intensive economy uses oil and gas amounting to about 4% of its GDP, nearly double Europe's share. The IMF projects that a prolonged war could trigger supply shortages and price spikes, leading to higher inflation and weaker growth. Under adverse scenarios, Asia's growth could drop by 1 to 2 percentage points cumulatively through 2027. Inflation is expected to rise to 2.6% in 2026 before easing. The IMF advises Asian central banks to remain agile in monetary policy and policymakers to provide targeted fiscal support, given limited buffers after pandemic spending. The region's net oil and gas imports account for approximately 2.5% of GDP, highlighting its exposure to external supply disruptions.
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