Tensions in the Strait of Hormuz are driving up energy prices, further burdening developing countries in Asia. Satellite data shows that nearly 60% of countries experience reduced nighttime lighting.
On August 4, 2569, at 14.00:XNUMX a.m., Bloomberg News reported that The conflict in the Middle East and tensions in the Strait of Hormuz are sending ripples throughout Asia. This is especially true for developing countries that are heavily reliant on energy imports, leading to soaring fuel costs, putting pressure on the cost of living, businesses, and economic growth.
Bloomberg Economics' analysis of NASA's Black Marble satellite imagery found that since the war began, nearly 60% of areas in Asia have experienced abnormally low nighttime brightness, reflecting decreased energy consumption and economic activity in many regions. Even after the temporary ceasefire in June, this proportion decreased to 54%, but if fighting erupts again, the region could face a new crisis.
One example is Cambodia, where gasoline prices increased by more than 40% after the US attack on Iran in February, resulting in soaring transportation and business operating costs.
Wuth Dara, an ice producer in Kampong Speu Province. He had to lay off two out of five employees, withdraw his children from English language school, switched from electric stoves to charcoal, and ice sales dropped from 50 bags a day to just 20, while still having over $20,000 in bank debt. He said that if another crisis hit, he could lose both his house and his business.
Bloomberg Economics estimates that the countries most vulnerable to the oil price crisis are Bangladesh, Pakistan, Cambodia, Myanmar, India, and China.Bangladesh was the hardest hit, with over 70% of its area experiencing reduced nighttime lighting. The impact was primarily felt in rural areas rather than major cities, as households and small businesses were less able to cope with the increased energy costs, reflecting the slowdown in electricity consumption and economic activity.
The Asian Development Bank (ADB) has lowered its forecast for economic growth in the Asia-Pacific region this year from 5.1% to 4.9%, while raising its inflation forecast to 4.3%. It also warned that oil prices could remain high until 2570 as commodity supply chains take time to recover.
The International Energy Agency (IEA) forecasts that Southeast Asia's energy import costs will almost double to approximately $160,000 billion this year.
This crisis has also prompted many Asian countries to accelerate their energy strategies. The Philippines has turned to energy discussions with Russia, while Indonesia and Thailand have strengthened energy cooperation with Russia. Cambodia has begun construction of a nearly $1,000 billion hydropower plant supported by China, and Laos is expanding its power transmission network to connect with China. Many governments have also implemented measures to mitigate the impact, such as reducing energy taxes, subsidizing oil prices, conserving energy, and declaring energy emergencies.
But the impact isn't limited to households. On Malapascua Island in the Philippines, where electricity is generated from diesel generators, the owner of a diving resort revealed that fuel costs have doubled, while bookings have dropped by about 25%, forcing them to raise fees and prepare to reduce costs.
Bangladesh, meanwhile, faces an additional $2.5 billion in energy import costs, forcing the government to purchase LNG on the spot market at nearly three times the normal price.
Many factories have slowed production, construction projects have been stalled, and offices, shopping malls, and restaurants have been asked to reduce their electricity usage. Many rural areas are experiencing power outages lasting several hours a day due to a shortage of approximately 300 megawatts of electricity.
ADB economists warn that if households are forced to take on more debt while businesses are compelled to lay off employees or close down, the impact of this energy crisis could leave permanent scars on Asian economies, similar to the effects experienced during the COVID-19 pandemic.
The war unfolding thousands of kilometers away is not only impacting oil prices but is also profoundly altering the lives, economies, and energy security of many Asian countries, particularly low-income nations heavily reliant on energy imports.
refer : bloomberg.com
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