World Bank Warns Asia of Depleting Reserves Amid Energy Crisis

The World Bank warned that emerging and developing economies in Asia are depleting their financial resources to combat an energy supply crunch triggered by the conflict between the United States, Israel, and Iran. A new report indicates that these nations have relied heavily on subsidies to maintain low retail gasoline prices, leading to a significant decline in foreign exchange reserves.

Indonesia, Thailand, and Vietnam have seen their dollar reserves drop by 15% to 40% since the start of the war. The institution noted that while these subsidies mitigated some retail price increases, they failed to curb headline inflation.

The report suggests that artificial intelligence could reduce this vulnerability by accelerating a shift toward domestic electricity generation and decreasing dependence on imported energy commodities. However, the institution cautioned that a global slowdown in AI activity could introduce new economic weaknesses.