Perspectives Emerging Markets offers quarterly updates from our research team, providing in-depth analysis of economic developments, market trends, and investment opportunities in emerging economies.
Second quarter 2026
Key findings
- South Asia is most affected by the Iran war due to its strong dependency on energy imports and low oil reserves
- EM central banks will be reactive as higher energy prices can quickly push up inflation expectations
- China: Thanks to its large oil reserves and low inflationary pressure, the impact of the Iran war remains limited
Number in focus
The war in Iran is weighing heavily on the global economy. Due to the effective closure of the Strait of Hormuz, around 20% of the world’s seaborne oil supply is disrupted. Asia is particularly affected, as some 90% of oil flows through the strait are destined for Asian economies. While North Asian countries are well protected in the short term thanks to their large reserves, South Asian economies are already experiencing a pronounced impact. The extent of the negative effects ultimately depends mainly on how long the war lasts and the associated supply shortfalls.
Chart in focus
The surge in energy prices in the wake of the Iran war is deepening the gap between net importers of energy, which are suffering from rising costs, and net exporters, which are benefiting from improved terms of trade – including several countries in Africa and South America. However, the main beneficiary is Russia, which is proving to be the biggest winner from this development. As the US has temporarily eased certain sanctions, demand for Russian crude oil is picking up again. Combined with higher oil prices, this provides the Russian war economy with a temporary financial advantage.
