KUALA LUMPUR (June 2): East and Southeast Asia economies have yet to see the worst of the supply chain disruption and price shock as the Middle East turmoil enters its fourth month, said a multilateral institution. 

While the economy of Southeast Asia, China, Japan, and South Korea — a bloc also known as Asean+3 — will grow 4.0% this year as projected, inflation rate will be higher at 1.8% than previously expected, according to the latest update from the Asean+3 Macroeconomic Research Office.

“Asean+3 growth has remained resilient, supported by firm domestic demand and technology exports,”said Dong He, chief economist of the institution also known as Amro. “But incipient signs of stress are emerging.”

The interim update comes as the Middle East see fresh exchange of military strikes, keeping prices of energy, commodity, and logistics elevated. 

In retaliation for ongoing ceasefire violations, Iran said it will stop negotiations with the US and vowed to fully block the Strait of Hormuz critical for the flow of global goods. 

Early signs of disruptions have also emerged in industrial inputs, including helium, sulfur, and fertilisers, Amro noted.

“Higher energy and transport costs are feeding into inflation and adding pressure on industrial supply chains,” He said. “If the conflict persists, these pressures could broaden and weigh on regional growth.”

Under an adverse scenario in which oil prices average US$125 (RM496) per barrel in 2026 and supply disruptions worsen further, Asean+3 growth could slow to 2.5% while inflation could accelerate to 3.5%, according to Amro's projections.