Rising fuel and fertiliser import costs are placing growing pressure on economies across Asia and the Pacific, especially small island states that rely heavily on imports. The Asian Development Bank (ADB) says governments are accelerating energy transition and resilience measures in response.
Economic growth in the Pacific could slow from 4.2% in 2025 to 2.8% in 2026, with downside risks potentially dragging it as low as 2.0%, according to the Asian Development Bank (ADB).
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The bank said the downgrade reflects worsening global conditions, linked in part to energy supply disruptions caused by the conflict in the Middle East.
ADB President Masato Kanda told Euronews the institution is already preparing targeted support for economies under strain.
“We have received several support requests and want to deliver assistance quickly and beyond immediate needs,” Kanda said. “We stand ready to help Pacific countries build resilience by diversifying energy sources.”
The ADB said small island economies remain particularly exposed to external shocks. Tonga, for example, spends more than 10% of its GDP on fossil fuel imports.
Energy transition and long-term investment
Alongside immediate assistance, the ADB is expanding investment in energy security and infrastructure projects across the region.
Kanda pointed to support for renewable energy projects, including the 15-megawatt Tina River Hydropower Project in Solomon Islands, which is expected to provide around 70% of the country’s electricity needs once completed in 2028.
He also referred to the expansion of battery and energy storage systems in several economies aimed at improving grid stability and reducing dependence on imported fuels.
“We are seeing investment in power storage systems in several countries, and this could help economies become more resilient over the long term,” Kanda said.
Food and input price pressures
Beyond energy markets, the ADB warned that developing economies across Asia remain exposed to rising fertiliser prices, adding pressure to food security and agricultural production.
According to the bank, import dependence accounts for more than 60% of consumption in most subregions, leaving them highly vulnerable to swings in external markets.
Exposure is greatest in South Asia, where 34% of fertiliser imports come from the Middle East. That is followed by Central and West Asia at 24%, Southeast Asia at 17%, and East Asia at 13%.
The bank said low-income economies with large agricultural sectors face the greatest risks because of their combined reliance on imports and vulnerability to food production shocks.
Regional cooperation and policy response
The ADB said it is deploying both emergency and medium-term support measures, including trade finance, budget assistance, and resilience programmes.
“We use our trade and supply chain financing for immediate short-term needs,” Kanda said. “We also provide rapid budget support to protect vulnerable populations and deploy medium-term resilience tools to stabilise economies.”
The impact is extending beyond the Pacific, affecting economies across Asia and Central Asia.
Japanese Finance Minister Satsuki Katayama told Euronews the effects are global, although uneven across regions.
“Central Asia includes major energy producers, so the impact may be less than elsewhere. Still, the entire world is being affected,” she said.
Katayama also stressed the need for closer regional cooperation, including supply chain diversification and energy transition efforts.
“These changes take time, but there is a shared sense that we are moving in the same direction,” she said.
With energy and food markets remaining under pressure, the ADB said the regional outlook will depend on how effectively economies adapt to continued supply disruptions and external shocks.
