Iran War Energy Crisis Slashes Asian Growth Forecasts

The Asian Development Bank lowered growth forecasts for developing Asia and the Pacific to 4.7% for 2026 and 4.8% for 2027, citing an energy crisis triggered by the Iran war. The near-closure of the Strait of Hormuz caused Asia's oil imports to drop 30% in April 2026, reaching the lowest levels since 2015.

Regional governments implemented diverse strategies to mitigate the shortage. Japan increased crude purchases from the United States and released 36 million barrels from national stockpiles. Indonesia prioritized domestic demand and sought alternative supplies from Russia, Africa, and Latin America. India utilized its state-led refining sector to absorb financial losses, preventing fuel price spikes for consumers.

China relied on its extensive reserves and restricted the export of fuel and fertilizer. Despite these measures, S&P Global Market Intelligence identified Pakistan, Bangladesh, and Sri Lanka as the most vulnerable nations due to thin fiscal buffers and the high cost of replacing disrupted energy supplies.