Asia energy crisis at ‘worst’ case scenario, ADB warns

{"text":[[{"start":9.55,"text":"The Asian Development Bank has said that Asia is now suffering the lender’s worst-case scenario under the global energy crisis, with 15 countries seeking emergency loans in response to the war in Iran."}],[{"start":22.75,"text":"ADB president Masato Kanda told the FT that the multilateral lender had received formal requests for $4bn as Asian economies grapple with severe shortages of oil and gas."}],[{"start":35.05,"text":"“The worst scenario is now materialised and . . . unfortunately Asia-Pacific is the region that is most severely affected,” said Kanda. “The energy price hike, the shipping price hike and the input price hike has now materialised.”"}],[{"start":50.699999999999996,"text":"Kanda added that the bank was “quite ready” to accept additional requests for “huge amounts” of funding. “We have ample headroom for further lending,” he said."}],[{"start":60.39999999999999,"text":"Asia has been hit particularly hard by the energy crisis due to the region’s heavy reliance on Middle Eastern oil and gas supplies. Many countries have already undertaken efforts to reduce energy demand and counter higher fuel prices, such as encouraging remote work and shortening working weeks or raising interest rates to combat inflation."}],[{"start":80.25,"text":"Kanda said that the region’s exposure to the Gulf energy crisis was feeding inflation and hitting growth, adding that fertiliser shortages were expected to result in higher food costs."}],[{"start":91.4,"text":"The ADB has downgraded its growth forecast for Asia-Pacific from 5.1 per cent to 4.7 per cent for 2026, and increased its inflation projection from 3 per cent to 5.2 per cent."}],[{"start":null,"text":"

"}],[{"start":104.65,"text":"The ADB is the largest multilateral development bank in Asia. Last year, it committed $29.1bn in funding to promote development in the region. Established in 1966, it is owned by 69 member countries, including 50 from the region. "}],[{"start":121.75,"text":"The Manila-based institution launched an emergency funding package in March in the weeks following the US and Israel’s attacks on Iran and closure of the Strait of Hormuz. "}],[{"start":131.85,"text":"It said that 15 countries had applied for funding, including Bangladesh, Fiji, the Philippines and Sri Lanka, as they face financial pressure including the loss of remittances and tourism revenue as well as restricted fuel and fertiliser supplies."}],[{"start":146.45,"text":"The largest single request was for $1.75bn from the Philippines, which has already declared a national energy emergency and shifted to purchasing Russian oil. The country depends almost entirely on Middle East oil and does not cap domestic prices or provide subsidies, making it particularly vulnerable to higher fuel costs."}],[{"start":166.95,"text":"In addition to the emergency package, India has requested $1.5bn “to build and accelerate resilience”, as the government of Prime Minister Narendra Modi tries to shield the world’s fastest-growing major economy from the economic fallout of the Gulf crisis."}],[{"start":183.6,"text":"Indian authorities have taken several measures to protect the rupee, which is one of Asia’s worst-performing currencies, from an increasing import bill. India is the world’s third-largest consumer of oil and gas and imports about 90 per cent of its supply. Foreign exchange reserves have fallen by $40bn since the start of the crisis."}],[{"start":null,"text":""}],[{"start":203.2,"text":"In Bangladesh, finance minister Amir Khosru Mahmud Chowdhury recently said the new government of Prime Minister Tarique Rahman was “out of pocket” by at least $3bn due to sharply higher energy costs. The country of 175mn imports about 95 per cent of its energy."}],[{"start":221.2,"text":"Senior officials in Dhaka told the FT the government had asked the IMF, the World Bank and the ADB for more than $3bn in financing, including budgetary support and emergency loans. "}],[{"start":233.89999999999998,"text":"Sri Lanka, which was the first country to formally request the ADB’s assistance, was already in the midst of an IMF-backed recovery following a financial crisis and sovereign default in 2022. "}],[{"start":245.89999999999998,"text":"Kanda met Sri Lankan President Anura Kumara Dissanayake in March and announced that the ADB would provide $100mn in additional budget support, increasing its total planned assistance for the country in 2026 to $480mn."}],[{"start":261.04999999999995,"text":"Kanda said the ADB was in discussions with four other countries over potential loans. “I expect more and more countries reaching [out to] us for support,” he said. “It is really a severe situation.”"}],[{"start":273.59999999999997,"text":"Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":284.84999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781235388_9560.mp3"}