Asia’s economic pain deepens as Iran war drags on

{"text":[[{"start":6.6,"text":"Asian economies fear more pain from rising prices as they confront the rising threat that prolonged conflict in the Middle East could trigger a region-wide growth shock."}],[{"start":16.1,"text":"The region is at the heart of fears over the economic fallout from the war because of its heavy reliance on energy supplied from the Middle East. Officials from Australia to Bangladesh are warning that soaring import costs are likely to push inflation considerably higher than projections made just weeks earlier. "}],[{"start":33.75,"text":"With economic activity in deeper doubt, the multinational Asian Development Bank has cut its growth outlook for developing economies in the region compared with forecasts made just a month ago. It now predicts a 4.7 per cent expansion this year and 4.8 per cent in 2027, down from forecasts of 5.1 per cent for both years."}],[{"start":55.4,"text":"Underlying that warning was a forecast for inflation to hit 5.2 per cent this year, rising from 3 per cent last year."}],[{"start":64.05,"text":"A “deepening crisis” was affecting the region, said ADB president Masato Kanda. “We are confronting systemic, long-lasting disruptions to global energy and trade networks, not just temporary volatility.”"}],[{"start":null,"text":"

"}],[{"start":79.25,"text":"Private sector economists said even richer countries could have to be more frugal with resources. In Japan, the region’s largest developed economy, policymakers at the central bank last week halved their forecasts for real GDP growth for the fiscal year ending next March, from 1 per cent to 0.5 per cent."}],[{"start":98.7,"text":"Frederic Neumann, chief Asia economist at HSBC, said central banks throughout Asia were facing “enormous” inflation shocks."}],[{"start":107.45,"text":"Subsidies and dipping into reserves might soften the problem “but these are just nuance at this point”, said Neumann. “The disruption is so severe that it will be felt across the region not just in energy but food and other inputs.” "}],[{"start":null,"text":""}],[{"start":122.15,"text":"South Korea’s import prices surged 16.1 per cent in March from a year earlier, marking the fastest monthly jump since January 1998, while Japan last week spent $35bn to support the yen as rising import bills put more pressure on the currency."}],[{"start":139.75,"text":"Singapore’s central bank tightened monetary policy for the first time in four years in April, while Australia’s central bank will meet this week to decide whether to raise interest rates for a third time in 2026 as it agonises over the balance between rising inflation and a deteriorating economic outlook."}],[{"start":157.4,"text":"Neumann said central bankers were becoming more worried about risks to growth, which would have a bigger impact than the initial shock of inflation, particularly on poorer countries with fewer buffers."}],[{"start":168.45000000000002,"text":"“The richer you are, the easier it is to go into the international market and bid for the last tanker that needs a harbour,” he said."}],[{"start":176.10000000000002,"text":"Bangladesh’s finance minister Amir Khasru Mahmud Chowdhury told the FT that spending on fuel has been “bleeding the exchequer”. Inflation in the country is stubbornly stuck at more than 8 per cent."}],[{"start":188.60000000000002,"text":"In India, officials say the country will remain the world’s fastest-growing large economy. But the Reserve Bank of India expects growth to slow to 6.9 per cent for the fiscal year that started on April 1, from 7.6 per cent last year, and cautioned that risks to its projections are “tilted to the downside” because of the conflict."}],[{"start":null,"text":""}],[{"start":209.95000000000002,"text":"Thailand, south-east Asia’s second-largest economy, trimmed its growth forecast for this year to 1.5 per cent from a prior target of 2 per cent due to the impact of the war. Bangkok also expects inflation to reach 3 per cent this year, far higher than its previous forecast of 0.3 per cent. "}],[{"start":229.9,"text":"The shock of rising prices has tempted some governments in the region to seek temporary protection for consumers. Japan has rolled out fuel subsidies, which means that petrol prices are only about 10 per cent higher than when the war began, while the Philippines is subsidising public utility drivers and Vietnam has tapped into an emergency fund to contain fuel price increases."}],[{"start":253.35,"text":"Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs, said there were three distinct phases in investors’ assessment of risks arising from the war."}],[{"start":262.9,"text":"Early in the conflict, investors were looking at the impact of rising prices. Then the focus turned to the possibility of resource shortages and how that would strike at economic models, he said."}],[{"start":273.29999999999995,"text":"“Now, it is about how fiscal policymakers are going to balance this trade-off between inflation and growth,” said Tilton."}],[{"start":280.59999999999997,"text":"Reporting by Leo Lewis in Tokyo, Song Jung-a in Seoul, Owen Walker in Singapore, A. Anantha Lakshmi in Jakarta, Nic Fildes in Sydney, Krishn Kaushik in Mumbai and Andres Schipani in New Delhi. Data by Haohsiang Ko in Hong Kong"}],[{"start":306.4,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777862986_3185.mp3"}