Asian Development Bank: Renewed Middle East Escalation Darkens Asia Outlook

The Asian Development Bank’s chief economist Albert Park said the end of a Middle East ceasefire had dimmed the outlook for developing economies in Asia. According to Jin10, Park said renewed escalation in the conflict could push up energy prices, raise risk premia, intensify inflation pressures, and prolong supply-chain disruptions across the region, which he said relies heavily on oil and gas imports from the Middle East. Park said immediate market reactions after the news suggested that escalation or persistent uncertainty could tighten global financial conditions as investors reprice risk, spreads widen, and the U.S. dollar strengthens, lifting imported inflation. He said this would be unfavorable for growth prospects in developing Asian economies because debt-servicing costs would rise, while investment and domestic demand would also be hit.