A new Asian Development Bank (ADB) report has warned that Fiji and other Pacific economies face mounting economic risks from the ongoing Middle East conflict, with the bank forecasting measurable hits to growth and higher inflation across developing Asia and the Pacific if disruptions persist. The report, released this week, flags rising fuel prices, supply chain interruptions and tighter financial conditions as channels through which the conflict is already rippling into the region.
The ADB estimates that, under a prolonged conflict scenario, growth across developing Asia and the Pacific could decline by as much as 1.3 percentage points, while inflation could increase by up to 3.2 percentage points over 2026–2027. For Fiji — an economy heavily reliant on imported fuel for transport, electricity generation and everyday consumption — the bank says even moderate energy price rises can produce significant income losses and push domestic inflation higher.
The report notes that shipping disruptions are already occurring on key global routes, citing a sharp decline in vessel traffic through the Strait of Hormuz. Such disruptions, the ADB warned, can quickly raise freight costs, delay production and strain supply chains, translating in Fiji into higher prices and potential delays for fuel, food and other essential imports. The bank also highlighted immediate risks to tourism and aviation: rising jet fuel costs and flight disruptions would increase travel expenses and are likely to depress visitor arrivals — a major concern for Fiji’s tourism-dependent economy.
Financial market impacts are already being felt, according to the ADB. The report observes regional currency weakness and tighter investment flows, developments that put additional pressure on smaller, open economies. The bank urges governments to safeguard macroeconomic stability and to deploy targeted measures rather than broad subsidies that can strain fiscal positions and be poorly targeted.
As part of its policy recommendations, the ADB called on countries to manage energy consumption more actively and accelerate energy diversification efforts. For Fiji, such steps would reinforce resilience to external shocks by reducing reliance on imported fossil fuels and exposure to global price swings. The bank’s advice underscores the importance of scaling up renewable energy, improving energy efficiency and designing targeted social support to protect vulnerable households without exacerbating fiscal vulnerabilities.
The report comes amid earlier local warnings about the domestic impact of higher global oil prices. Fiji’s competition watchdog previously warned that rising international fuel costs would quickly flow through to local pump prices and broader living costs, reflecting the nation’s status as a net fuel importer. The ADB’s new analysis matters because it moves beyond early cautions to provide quantified scenarios for growth and inflation, and to document shipping disruptions that are already materialising.
With the conflict showing no immediate sign of abating, the ADB says policymakers in the Pacific face a narrow window to shore up macro buffers, prioritise targeted fiscal support and speed up transitions to cleaner, domestic energy sources to limit the economic fallout from further escalation.
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