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28 October 2026 / Report
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Copy LinkEconomic pressures are becoming increasingly visible across Asia-Pacific, despite continued support from strong exports and the AI investment cycle. While several emerging economies continue to outperform expectations, growth remains uneven and increasingly vulnerable. The mid-October sell off in technology stocks exposed concerns over elevated valuations, rising financing costs, and the sustainability of AI-related investment. The correction also highlighted the region’s dependence on a narrow growth engine.
Meanwhile, persistent disruptions to energy flows through the Strait of Hormuz are keeping oil prices elevated, fueling inflation and raising production and living costs across the region. Adding to these pressures, extreme weather and intensifying El Niño conditions threaten agricultural production, food prices, and energy supplies. Together with tighter financial conditions, these developments are weighing on already fragile consumer sentiment. As economic vulnerabilities become more pronounced, governments are adjusting their policy responses, balancing monetary tightening with expansionary fiscal measures to sustain growth and cushion households.
Central bank policy interest rates in 2026
Monetary policy across Asia-Pacific has shifted markedly since the crisis in the Strait of Hormuz, with several central banks reversing earlier accommodative stances to contain imported inflation and currency pressures. The adjustment in monetary policy has become more pronounced over the past six weeks as elevated energy prices continue to feed through into domestic costs.
Australia and Indonesia have tightened most aggressively, each raising policy rates by 100 basis points in 2026. Australia’
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