Fiji and other Pacific economies face growing economic risks from the escalating conflict in the Middle East, particularly through rising fuel prices and supply chain disruptions, a new report by the Asian Development Bank (ADB) warns.
The report highlights that economies in Asia and the Pacific, including Fiji, are highly vulnerable due to their reliance on imported energy.
“The 2026 conflict in the Middle East affects economies… through higher energy prices, supply chain and trade disruptions, tighter financial conditions, and weaker remittance flows,” the ADB states.
For Fiji, where fuel imports are critical to transport, electricity generation and daily living costs, any sustained increase in global oil prices could significantly impact inflation and economic growth.
The report notes that even moderate increases in energy prices can result in “significant income losses” for energy-importing countries.
It warns that under a prolonged conflict scenario, growth across developing Asia and the Pacific could fall by up to 1.3 percentage points, while inflation could rise by as much as 3.2 percentage points over 2026–2027.
Shipping disruptions are also a concern, particularly through key global routes such as the Strait of Hormuz, where a sharp decline in vessel traffic has already been recorded.
“Shipping disruptions can quickly raise costs, delay production, and strain supply chains,” the report states.
For Fiji, which depends heavily on imports for fuel, food and essential goods, these disruptions could translate into higher prices and delays in supply.
The report also highlights risks to tourism and aviation, with flight disruptions and rising jet fuel costs likely to increase travel expenses and affect visitor arrivals.
Financial markets have also reacted, with regional currencies weakening and investment flows tightening, adding further pressure on smaller economies.
The ADB is urging governments to safeguard macroeconomic stability, manage energy consumption and accelerate efforts toward energy diversification.
“Policymakers should… accelerate energy diversification,” the report states, adding that targeted support measures are preferable to broad subsidies.
