By Fabiana Negrin Ochoa
Growth in the Asia-Pacific region is expected to hold up, supported by tech-oriented economies and sectors, despite the energy shock unleashed by the Mideast war, S&P Global Ratings said.
However, higher energy prices will remain a drag on the region and prolonged market disruption pose a key risk, economists Louis Kuijs and Vishrut Rana said in a report.
The region is balancing solid momentum with emerging obstacles: While tech-driven export demand and resilient domestic activity support growth, pressure from the Middle East conflict, higher energy prices, and shifting U.S. tariff policy is intensifying, they said.
The artificial-intelligence boom, and surge in demand for chips and data center infrastructure, was a boon for Asia last year, helping offset the hit from U.S. tariffs. As 2026 got underway, the trade threat had eased as countries hammered out deals with Washington and a court ruling in the U.S. voided many of Trump's levies.
But that tariff relief will fade as energy stress dims outlook, the S&P economists said.
In all, the firm has raised baseline 2026 gross domestic product growth forecasts for Asia-Pacific--excluding China--to 4.5% from 4.2%. The upgrade is driven by sizable upward revisions for Hong Kong, India, Malaysia, Singapore and Taiwan.
Next year, S&P projects regional growth at 4.4%.
Much will depend on how the war in the Middle East develops.
S&P's baseline forecast assumes a significant but generally manageable economic impact.
Under this scenario, the Strait of Hormuz--the key shipping lane for a significant amount of the world's oil and gas--will experience major disruptions until early April, with flows recovering gradually thereafter. Brent crude prices would average $92 barrel in the second quarter and about $80 for the year, S&P projects.
In a more unfavorable scenario, the energy market disruption is deeper, and longer-lasting, dealing a heavier economic blow. If that occurs, S&P sees Brent peaking at $200 a barrel and averaging almost $130 in 2026, before gradually tapering toward $100 by 2027.
Those conditions would mean a harsher impact for Asia-Pacific, even with policies in place to contain fuel-price increases.
"Higher energy prices will further dampen appetite for rate cuts, but widespread hikes remain unlikely," the economists said.
Currencies may face depreciation pressure, especially in emerging markets and net energy importers.
S&P expects some emerging Asian central banks--particularly Indonesia and the Philippines--to tighten policy in response to energy prices, weaker current accounts and softer currencies.
But any tightening is likely to be modest, and with inflation mostly benign across most of APAC, central banks can largely wait, they said.
Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
March 24, 2026 21:28 ET (01:28 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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