Escalating tensions in the Middle East are triggering economic turbulence across ASEAN and Europe, with rising energy prices and supply chain disruptions threatening growth in 2026. A Maybank report warns the crisis could deliver a "stagflationary shock" to Southeast Asia—slowing economic activity while inflating costs for businesses and households.
ASEAN’s heavy reliance on Middle Eastern energy imports leaves it acutely vulnerable. The Philippines sources 95% of its crude oil from the Gulf, while Vietnam imports 88% of its crude and 49% of its natural gas from the region. Singapore, Indonesia, and Thailand face similar pressures due to their dependence on Gulf diesel supplies.
Europe, already grappling with energy market volatility, faces renewed strain as shipping delays and insurance costs rise. Analysts urge diversification of energy sources and accelerated green transitions to mitigate risks. The situation underscores Asia’s interconnectedness with global crises, with policymakers walking a tightrope between inflation control and growth preservation this year.
