The forces of scarcity hitting Asia may soon spread across the world
When the war in Iran started on Feb. 28, Asia expected to see serious, gradual impacts from losing access to a huge portion of the world’s oil and gas. But the conflict’s economic and social impacts have hit the region harder and faster than officials and experts expected.
Many countries across the Asia-Pacific are experiencing sudden jolts of disruption that they are struggling to manage, with some comparing the crisis’s breakdowns and scope to the Covid pandemic.
Even if there is a peace deal soon, the future of this industrious region that has driven global economic growth for decades will likely include months of canceled flights, surging food prices, factory pauses, delayed shipments and empty shelves for products long considered quick and easy to buy worldwide: plastic bags, instant noodles, vaccines, syringes, lipstick, microchips and sportswear.
Collectively, according to many officials and experts, if the war’s strangling of commercial traffic through the Middle East lasts for even a few more weeks, and uncertainty lingers, shortages could push several countries into convulsions of unrest, followed by recession.
Countless businesses are verging on insolvency. Governments are taking on enormous debt to slow inflation. By year’s end, in the most dire projections by the United Nations and others, millions across Asia could be pushed into poverty.
“The impacts are so rapid and deep,” said Phillip Cornell, a senior fellow at the Atlantic Council’s Global Energy Center who is based in Sri Lanka. “Just from a magnitude perspective, this is really very, very, very large.”
Resource scarcity tends to unleash dark forces in human psychology and capitalism. As the International Monetary Fund has noted, the world economy is slowing nearly everywhere because roughly a fifth of the world’s oil and liquid natural gas, along with vital byproducts, have been held back from the global market since the war started. Even if the Strait of Hormuz stabilizes tomorrow, it could take years for oil and gas output and shipping to reach fat prewar levels. [Continue reading…]