Kuala lumpur: The ASEAN+3 Macroeconomic Research Office (AMRO) has revised its inflation projection for the ASEAN+3 region to 1.8 percent, up from the previously estimated 1.4 percent in 2026, while maintaining the growth estimation at 4.0 percent.
According to BERNAMA News Agency, this revision is detailed in AMRO's latest regional economic outlook report, attributing the change to the ongoing disruption caused by the West Asia conflict, which has now entered its fourth month. The conflict has continued longer than initially expected, with earlier forecasts anticipating a resolution within two months.
Dong He, AMRO's chief economist, pointed out that despite the resilient growth driven by strong domestic demand and technology exports, the region is starting to show signs of stress. This is due to increasing energy, commodity, and logistics costs, along with tighter supplies of petroleum products.
"Higher energy and transport costs are feeding into inflation and adding pressure on industrial supply chains," He explained. He also warned that if the conflict continues, these pressures could expand and potentially hinder regional growth.
AMRO highlighted that while robust growth was recorded in the first quarter, the full repercussions of the West Asia conflict are yet to be felt. The report stressed that the conflict's duration and intensity remain significant near-term risks to the economic outlook.
The agency warned that in a worst-case scenario, where oil prices surge to an average of US$125 per barrel in 2026 compared to the baseline assumption of US$95 per barrel, and supply disruptions intensify, ASEAN+3 growth could decelerate to 2.5 percent, with inflation potentially climbing to 3.5 percent.
In light of these challenges, AMRO suggested that policy responses need to be flexible and adaptive as the situation unfolds. It recommended that immediate support measures should be targeted and temporary, while long-term strategies should aim to bolster energy security, enhance supply-chain resilience, and promote regional integration.