ADB warns of Middle East shock, pushes ASEAN to act on markets and Energy security

MANILA, 09 APRIL 2026 (PACNEWS) — Asian Development Bank President Masato Kanda has warned that the conflict in the Middle East is hitting Southeast Asia hard, driving inflation, raising costs and threatening food security across the region. 

Kanda said the impact of the crisis goes beyond energy, with Southeast Asia heavily exposed to oil imports. 

“We meet at a pivotal moment for our region. The global environment is challenging the ambitions of the Association of Southeast Asian Nations (ASEAN).” 

“The conflict in the Middle East is hitting hard. The impact goes well beyond energy prices. Southeast Asia imports about 60 percent of its oil from the region. This shock is already driving capital flows and exchange rate volatility. It is pushing up production costs, stoking inflation, and threatening food security. Fertilizer prices alone surged by over 40 percent just ahead of the planting season.” 

He said governments must respond on three fronts: stabilising economies, protecting vulnerable groups and strengthening long-term energy security. 

“This demands action on three fronts: stabilizing macroeconomic conditions, protecting vulnerable households and affected sectors, and building greater energy security over the long term.” 

Kanda said the ADB is ready to step in with financial support, pointing to its response during the COVID-19 pandemic. 

“When crises hit, we must move quickly. During COVID-19, the Asian Development Bank (ADB) provided US$7 billion to Southeast Asian economies in the first year alone. We stand ready to do the same today.” 

He also warned that weak capital markets are leaving the region exposed and called for urgent reforms to deepen financial systems. 

“This crisis also carries a wider message. In a volatile world, strong capital markets are not just a long-term goal. They are an immediate line of defence.” 

Kanda said ASEAN has made progress, but gaps remain, with limited cross-border investment flows despite a US$2.6 trillion local currency bond market. 

“Yet, a small business in Cambodia still cannot access capital from a pension fund in Singapore. Or a Philippine infrastructure project cannot readily tap Malaysian savings.” 

He highlighted digital transformation as a key solution to connect capital across borders. 

“Fintech, AI, and distributed ledger technology can help connect regional savings to investment opportunities across borders. They make it faster and cheaper than ever before.” 

But he warned that increased connectivity also brings risks, including financial shocks and cyber threats. 

“These are not reasons for caution. They are reasons for coordination.” 

Kanda called for stronger regional cooperation, including harmonised regulations, support for innovation and investment in digital infrastructure across all ASEAN economies. 

“Digital infrastructure investment must reach every ASEAN economy, not just the most advanced. Otherwise, integration will only deepen the gaps it was meant to close.” 

He reaffirmed ADB’s support for regional initiatives, including the ASEAN Capital Markets Forum and efforts to expand sustainable finance and bond markets. 

“In 2025, our commitments surpassed US$29 billion, an increase of 20% in a year. Our share of operations supporting digital transformation jumped from 9 percent to 29 percent.” 

Kanda said building strong financial systems is essential for long-term growth and resilience in a volatile global environment. 

“There is no stronger foundation than deep, well-functioning financial systems. Digital technology is the critical tool for getting there.” 

He said ADB will continue to support the region in managing immediate risks while building the systems needed for future stability and growth…. PACNEWS