The International Monetary Fund published a transcript of its Spring Meetings 2026 press briefing on the Regional Outlook for Asia and the Pacific, warning that a sharp rise in oil and gas prices linked to the Middle East conflict is pushing up inflation, weakening external balances and tightening financial conditions, while leaving the baseline outlook broadly unchanged from January under a reference scenario of a limited-scope, limited-duration conflict. Regional growth is projected to moderate from 5.0% in 2025 to 4.4% in 2026 and 4.2% in 2027, while inflation is projected to rise from 1.4% in 2025 to 2.6% in 2026 and ease to 2.4% in 2027. The briefing highlighted Asia’s exposure through high oil and gas use (about 4% of GDP for the region as a whole) and import dependence (net oil and gas imports around 2.5% of GDP), alongside potential supply-chain effects from disruptions to non-energy inputs such as fertilizers and petrochemicals. The IMF set out downside scenarios in which oil prices rise to about 60% above the January forecast in 2026 and remain 20% higher in 2027, implying cumulative output losses of about 0.8% by 2027 for major Asian economies, and a more severe case with cumulative losses of almost 2% by 2027. On policy, it advised central banks to remain agile and, where inflation expectations are anchored, to look through first-round headline inflation while guarding against currency depreciation and second-round effects; it also stressed allowing exchange rates to act as shock absorbers where regimes permit. For fiscal policy, it recommended temporary, targeted support with sunset clauses and warned against broad fuel subsidies, tax cuts and general price caps, emphasising preserving buffers and maintaining price signals. The IMF indicated it would revisit China’s outlook in July, and noted it is engaging closely with countries under existing programmes but had not received requests for new IMF programmes linked to the shock.

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