IMF Official Says Asia Must Promote Energy Supply Diversification

Washington (ANTARA) - Global energy supply disruptions caused by the war in the Middle East have heightened concerns among countries in the Asian region regarding energy diversification, according to an official from the International Monetary Fund (IMF).

“I think this shock has raised concerns about energy security,” said Thomas Helbling, Deputy Director in the IMF’s Asia and Pacific Department, to Xinhua.

According to the IMF’s latest “Regional Economic Outlook for Asia and Pacific” report released last week, Asia’s growth is projected to slow from 5 per cent in 2025 to 4.4 per cent in 2026 and 4.2 per cent in 2027.

The report states that oil and gas usage in the region accounts for around 4 per cent of gross domestic product (GDP), nearly double Europe’s share. This figure exceeds 10 per cent in countries such as Malaysia and Thailand, where the transport and industrial sectors play a larger role.

The Middle East remains the primary source of oil supply for many Asian economies, but greater energy diversification—reducing dependence on a single source by expanding the energy supply mix—would strengthen Asia’s long-term energy resilience, Helbling stated.

“We also see that economies more reliant on fossil fuels are more severely affected,” Helbling said, adding that Asia is the world’s main manufacturing hub, consuming large amounts of energy to produce goods that are also exported globally.

Helbling emphasised that emerging economies and developing countries in Asia are generally more vulnerable to energy shocks because consumers and end-users spend a larger portion of their income on fossil fuels compared to those in more advanced countries.

Helbling said another concern for net energy-importing countries is if they face balance of payments financing constraints. In such conditions, rising import costs would make financing oil imports more difficult.

Looking ahead, there is considerable uncertainty facing the Asian economy and the global economy more broadly, Helbling said.

Monetary policy must be responsive to stabilise inflation expectations and prevent energy shocks from causing significant second-round effects, Helbling stated, urging policymakers in Asia to allow exchange rates to act as a shock absorber, particularly in energy-importing countries and those dependent on trade.