Energy Crisis Looms Over Asia, IMF Calls for Structural Reforms

JAKARTA – The Asia region is entering 2026 with a relatively strong economic foundation. Economic growth remains resilient, technology exports stay solid, and domestic consumption is beginning to recover. However, behind this resilience, a new threat is emerging that is increasingly seen as systemic: high dependence on imported energy. The International Monetary Fund (IMF) in its Regional Outlook for Asia-Pacific report emphasises that Asia’s economic structure, which heavily relies on oil and gas, has now become the primary source of vulnerability amid the surge in global energy prices due to geopolitical conflicts. This energy crisis is not merely a short-term shock. The IMF views it as a structural pressure that could trigger inflation, weaken external balances, and narrow the policy space for economies in the region. One of the main sources of Asia’s vulnerability is the high energy intensity in the economy. These figures indicate that economic activity in Asia is heavily dependent on fossil fuels, from manufacturing industries to transportation. This dependence is further exacerbated by the limited domestic energy production in many Asian countries. As a result, the region has become a net energy importer, with the value reaching around 2.5% of GDP, and even up to 8% in some countries like Singapore and Thailand. When global energy prices rise or supplies are disrupted, the impact is immediately felt on inflation, exchange rates, and overall economic stability. The IMF assesses that the impact of energy shocks does not stand alone but triggers widespread domino effects in Asia’s economy. The surge in oil and gas prices directly drives inflation. The IMF projects that regional inflation will increase from 1.4% in 2025 to 2.6% in 2026.