Red Sea: Supply Chain Woes May Send Inflation on the Rise
Escalating violence in the Red Sea could lead to slower economic growth and heightened inflation across Asia, according to the Economist Intelligence Unit (EIU).
Supply chain disruptions might trim up to 0.5 percentage points from Asia’s economic growth this year, while adding up to 0.4 percentage points to the inflation rate. Southeast Asian economies like Indonesia, Thailand, and Malaysia, heavily reliant on exports, could be particularly vulnerable.
Red Sea woes
Higher inflation might challenge central banks in countries like the Philippines, Australia, and India, complicating their efforts to begin monetary easing.
Prolonged disruptions may prompt manufacturers to seek alternatives closer to end-user markets, potentially reshaping supply chains in Asia.
Shipping delays have already stretched from northwest Europe to destinations like Malaysia, Singapore, China, Hong Kong, and Taiwan.
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