Goldman Sachs: The prolonged conflict in the Middle East may put pressure on emerging economies in Asia, and a blockade of the Strait of Hormuz could lead to rising inflation
Goldman Sachs analysts pointed out in a research report that the protraction of the Middle East conflict could put pressure on emerging economies in Asia. Goldman Sachs estimates that if the Strait of Hormuz is closed for six weeks, oil prices could rise to $85 per barrel.
In this scenario, the region's inflation rate could increase by about 0.7 percentage points, with the highest sensitivity in the Philippines and Thailand. Supply disruptions could average a 0.5 percentage point drag on the region's real GDP growth, with Singapore being the most severely affected. Goldman Sachs added that almost all countries in the region could see a deterioration in their current account balances, led by Thailand and Singapore.
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