Goldman Sachs: Prolonged Middle East conflict may put pressure on emerging Asian economies, and the Strait of Hormuz blockade could lead to rising inflation

Goldman Sachs analysts pointed out in their research report that the prolonged Middle East conflict could put pressure on emerging Asian economies. 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, inflation rates in the region could increase by about 0.7 percentage points, with the Philippines and Thailand being the most sensitive. Supply disruptions could cause an average 0.5 percentage point drag on real GDP growth in the region, with Singapore being the most 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.