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The ongoing crisis in West Asia is expected to keep crude oil prices elevated. Albert Park, the chief economist at the Asian Development Bank, shared this insight during an interview. He indicated that due to the current circumstances, crude oil prices are projected to average around $96 per barrel in 2026 and drop to $80 per barrel in 2027. This suggests that high oil prices may be a long-term reality.

Park noted that futures prices remain high, and there is a noticeable premium in the spot market due to a significant shortage of crude oil. He mentioned that the crisis in West Asia could lead to a 0.6% reduction in India's GDP growth rate, bringing it down to 6.3%. Additionally, inflation is expected to rise significantly this fiscal year. The ADB had previously estimated that strong domestic demand would keep India's GDP growth at 6.9% for the current fiscal year, with an increase to 7.3% in the next fiscal year.

Regarding inflation, the ADB has projected it to remain at 4.5% for the current fiscal year. Park stated that while a 0.6% decrease in growth is anticipated for 2026-27, it should not adversely affect growth next year, as India is expected to rebound. He forecasted that inflation would rise to 6.9% this year, which is slightly above the regional average due to India's reliance on imported oil and gas. Excluding China, the negative impact on growth across the region is expected to be similar.

The ADB has revised its growth forecast for the Asia-Pacific region for 2026 from 5.1% to 4.7%. When asked about the impact of El Niño on food production, Park acknowledged the uncertainty, stating that crop failures in India often lead to price increases. India plays a significant role in global rice trade, so events in India can have substantial repercussions for other countries.

Park also highlighted the rising costs of fertilizers as a concern. He explained that higher fertilizer prices may lead farmers to use less, resulting in lower yields and reduced availability by the end of the year. This will likely affect food prices, but the extent of the impact will depend on the gas crisis.