Asia-Pacific Economies Face Growing Economic Risks Amid US-Iran Conflict Asia-Pacific economies have entered 2026 on fragile footing, with the escalating US-Iran conflict adding significant uncertainty to growth prospects for major countries like China, India, and others in the region, according to Moody’s Analytics. The report highlights how the Middle East conflict has intensified existing economic challenges, compounding risks to GDP growth and complicating the outlook for the region. The global economy has endured a series of disruptions since the start of the decade, including the COVID-19 pandemic, the Russia-Ukraine war, and the Trump administration’s trade policies. Now, the Middle East conflict has introduced another layer of instability, particularly for economies reliant on energy imports. The disruption of shipping through the Strait of Hormuz and damage to Gulf energy infrastructure have driven oil prices past $100 per barrel, fueling inflation concerns and straining supply chains. Moody’s Analytics warns that the Middle East conflict has created a “troublesome mix of external threats” for Asia-Pacific economies. The report identifies three key risks: the ongoing conflict, Trump-era tariff policies, and the potential slowdown of the AI-driven economic boom. The conflict’s impact is particularly pronounced for countries dependent on imported energy, such as Japan, South Korea, and Taiwan, which maintain strategic oil reserves to buffer against price shocks. However, India and Southeast Asian nations, which have smaller reserves, rely more on price caps and subsidies to protect consumers from volatility. The report notes that while exports have remained strong due to front-loaded shipments ahead of US tariff hikes, domestic demand remains weak across much of the region.#strait_of_hormuz #us_supreme_court #reserve_bank_of_india #taiwan #moody_s_analytics
