− Supply risks for Asian economies and industries have broadened well beyond primary energy to refined fuels, fertilizers and industrial inputs (plastics, metals and helium), and are amplified by intra-regional dependencies. These internal choke points can transmit shocks even to economies with limited direct exposure to the Middle East like Australia and New Zealand.

− Asia-Pacific economies are diverging into three clusters based on their shock absorption capacity: S&P Global Market Intelligence has developed a vulnerability ranking to sort Asia-Pacific economies into three categories: “steady” (economies with ample buffers to contain cost pressures), “squeezed” (economies requiring active policy intervention to manage supply and inflation), and “stressed” (economies facing intensifying macro-financial pressures).

− Across Asia-Pacific, the most exposed sectors are energy, fertilizers, petrochemicals, textiles and electronics. South Asia faces the highest macro-level exposure, while Japan, mainland China, Taiwan and major Association of Southeast Asian Nations (ASEAN) producers confront industry-specific bottlenecks.

− The Middle East war has shrunk policy space for the region, especially for squeezed and stressed economies, where growing subsidies, currency intervention and import prioritization are crowding out investment, worsening public debt dynamics and heightening external financing risks.