Featured Research
Macroeconomic Insights: Nowcasting APAC Through the Hormuz Shock
No region sits closer to the February 2026 closure of the Strait of Hormuz than Asia. On Energy Information Administration (EIA) estimates, roughly four fifths of the crude that transited the strait before the closure was delivered to Asian markets, with China, India,...
Macroeconomic Insights: Nowcasting APAC Through the Hormuz Shock
No region sits closer to the February 2026 closure of the Strait of Hormuz than Asia. On Energy Information Administration (EIA) estimates, roughly four fifths of the crude that transited the strait before the closure was delivered to Asian markets, with China, India, Japan and South Korea the four largest destinations, and a comparable share of Qatari liquefied natural gas (LNG) moved through the same chokepoint to buyers concentrated in the same four economies. Latin America experienced this shock as a benchmark price. Asia experienced it as a physical supply disruption, layered with freight rerouting, war-risk insurance premia and competition for non-Gulf barrels that raised landed costs by more than the move in Brent alone. Yet nearly six months on, eight countries within the region most dependent on Gulf crude have experienced very different inflation shocks.
The dispersion starts behind the chokepoint, in how each economy converts the same landed-cost shock into consumer prices. Japan and South Korea source the overwhelming majority of their crude from the Middle East, near 95% in Japan’s case on Ministry of Economy, Trade and Industry (METI) figures, but both economies meet the consumer through deregulated fuel markets, hedged utilities and, in Japan’s case, a pre-existing disinflation from unwinding food base effects. In both economies the retail fuel price is set by the market, and the buffering comes from government subsidy and tax decisions layered on top of it, which are renewed or allowed to lapse on their own timetable.
The Philippines imports essentially all of its crude and refined products and passes world prices to the pump with little intermediation, giving it the fullest first-round exposure in the region. Thailand is as import-dependent but less exposed, because the Oil Fuel Fund and the regulated electricity tariff sit between world prices and the consumer, making it a policy-buffered pass-through case. India and Indonesia stand between these poles, heavy importers whose excise and administered-price instruments meter the pass-through.
Malaysia is the structural exception, the only net energy exporter in our Asian panel, whose petroleum revenues rise with the same shock its RON95 retail ceiling suppresses, so the fiscal position that funds the buffer strengthens as the buffer becomes more expensive. And China, the single largest buyer of Gulf crude, is the one economy where the domestic demand cycle is weak enough to block transmission almost entirely. The latest realised readings reflect that spread, spanning 0.5% YoY in China and 2.0% in Thailand to 6.2% in the Philippines, with South Korea at 2.8%, Indonesia at 2.9%, Malaysia at 2.0%, Japan at 1.7% and India at 4.5% on the most recent available prints.
Reading the Vintages
More telling than the levels is the direction of our own revisions. Since June our forecast curves have been walked steadily lower for Thailand, South Korea, the Philippines and China, while Malaysia, Indonesia and Japan have been revised up, and India has barely moved. The peak pass-through scenario our models priced at the height of the shock is being unwound in the economies where it was largest, at the same time as delayed and policy-mediated effects surface in the economies where the first round was suppressed.
The First Round Runs Its Course
The Philippines remains the cleanest pass-through case in our Asian coverage, and the one where the revisions are almost entirely a cost-environment update. With little administered-price apparatus standing between world prices and the pump, the realised prints have tracked our curves closely, 7.2% YoY at the April peak and 6.2% in July, confirming that the first round went through in full. Our June vintages were generated at the height of the disruption, with the landed-cost impulse from crude, freight rerouting and war-risk premia at its widest, and each subsequent vintage has incorporated the normalisation of those conditions as it has entered the data. The curve has accordingly come down in parallel across the whole horizon, the pattern produced by an easing cost environment. Our 6 August curve holds inflation near 7% into November before base effects cut it to roughly 3% by April 2027, with the remaining forward risk in transport fares and food logistics, the components that reprice with a lag (Figure 1).
Figure 1

Thailand shows the largest downward revision in the region, and the sequence of vintages reflects both the incoming prints and the policy decisions behind them. The May, June and July prints, ending at 2.0% YoY in July, arrived as Thai policy was actively responding to the shock, with the Oil Fuel Fund’s retail caps and the regulated electricity tariff set period by period. Each successive vintage has incorporated those decisions as they were taken, so the progression from the 8 June curve, which peaked near 5.6% in early 2027, to the 6 August curve, which peaks at roughly 3.2% and falls towards 0.3% by April 2027 as the April 2026 jump drops out of the base, tracks the accumulation of policy interventions alongside the softer prints they produced (Figure 2). On the current curve the Thai shock resolves as a level shift contained by price administration, and the low post-base-effect trough reflects that Thailand entered this episode from outright deflation.
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