Inflation could have global repercussions
“Smaller energy-importing economies, including the Philippines, Pakistan, and Sri Lanka, are likely to experience comparatively stronger macroeconomic effects,” the ADB report said. “In these economies, higher oil prices tend to transmit rapidly into inflation and exchange rate pressures through widening current account deficits and increased foreign currency demand.”
Emerging markets are especially exposed to the wider impacts on inflation, exchange rates and import costs, says Lim. The conflict has already begun to reprice energy, shipping, insurance, aviation, and financial risk globally, he adds, raising the risk of inflation.
“Low‑income countries are among the most vulnerable everywhere: many rely heavily on Middle Eastern fertilizers and fuels and have limited buffers to absorb higher import costs,” Nizard tells TIME.