INDONESIA
Rupiah marks strongest gain in over six months, aligning with broader Asian trends
(25 March 2026) Indonesian markets rebounded after a week-long holiday, supported by easing geopolitical concerns following signals from Donald Trump regarding potential de-escalation in the Iran conflict. The rupiah appreciated by up to 0.6% against the US dollar, its strongest gain in over six months, while the Jakarta Composite Index rose as much as 1.5% and the 10-year government bond yield increased by six basis points. Market gains aligned with broader Asian trends and were supported by a decline in oil prices. However, uncertainty remains elevated, with volatility driven by shifting perceptions of escalation risks. During the holiday closure, a US-listed ETF tracking Indonesian equities declined 2% and an ASEAN stock index fell 1.8%, reflecting investor caution. Structural pressures persist, including credit outlook downgrades by global ratings agencies and a warning from MSCI over a potential market status downgrade. Prior to the holidays, Indonesian equities had fallen more than 20% from their January peak, entering bear market territory, while the rupiah had depreciated to record lows beyond Asian Financial Crisis levels. Despite vulnerabilities to geopolitical risks in the Persian Gulf, Indonesia may benefit from sustained demand for coal and palm oil exports amid high energy prices and shifts in East Asian sourcing strategies.

SINGAPORE
Monetary Authority of Singapore to tighten monetary policy at next meeting
(24 March 2026) Economists expect the Monetary Authority of Singapore to tighten monetary policy at its next meeting by 14 April, with signals that its 2026 core inflation forecast of 1%–2% may be revised upward due to rising import costs linked to the Middle East crisis. The central bank indicated it will update its inflation outlook, which analysts interpret as a precursor to policy tightening using its exchange rate-based framework. Bank of America highlighted emerging broader price pressures that may require stronger action to anchor inflation expectations. United Overseas Bank expects a 50-basis-point steepening of the policy slope in April and potentially another in October, with risks of earlier implementation in July, while more aggressive measures such as re-centering the policy band would depend on significant inflation surprises. Oversea-Chinese Banking Corp stated the April meeting is “live”, with options including slope steepening or combined adjustments, driven by rising import costs and resilient domestic labour market conditions. Maybank reported fuel prices have already risen sharply, with RON95 petrol up 20% and diesel about 40%, alongside expected electricity tariff increases in April. They also noted rising fertiliser, cooking gas and logistics costs are likely to raise food prices, which account for 20% of the inflation basket. Economists expect inflationary pressures to broaden as businesses pass higher input costs to consumers, with the transmission of the external shock still at an early stage.

CAMBODIA
LNG shortages reported in Cambodia, affecting public transport and households
(24 March) Liquefied petroleum gas shortages and price increases are emerging in Cambodia after Sokimex, operated by Sok Kong Import Export, announced it will cease LPG sales from 1 April due to an inability to import supply since early March. LPG prices have risen 60% since 4 March, while a 15-kilogram cooking gas cylinder increased from USD 17 to USD 30, triggering panic buying among tuk-tuk drivers, taxi operators, and households, with sellers reporting stock depletion. The disruption follows a broader fuel price surge linked to the Iran conflict, with gasoline prices up around 40% and diesel 70%, prompting the government to cut excise and value-added taxes. Sokimex accounts for approximately 3% of the LPG market, and Cambodia’s Energy Minister stated that seven other suppliers have placed orders with deliveries expected in March and April, while urging reduced LPG usage and substitution with electric stoves. Cambodia remains fully reliant on imported LPG, with 65% sourced from Viet Nam over land, 27% by sea, and the remainder from Thailand, increasing exposure to supply shocks. Sellers report operational disruptions and customer losses due to depleted inventories, while informal sector workers face declining income and rising financial stress, with approximately 85% of drivers holding debt. The supply shock adds pressure to an already weakened economy affected by slower growth, rising non-performing loans, geopolitical tensions with Thailand, and U.S. trade measures.

THE PHILIPPINES
Aircrafts being grounded due to jet fuel shortages a “distinct possibility”
(24 March 2026) Philippine President Ferdinand Marcos Jr. stated that grounding aircraft due to jet fuel shortages linked to the Iran conflict is a “distinct possibility”, citing reports that some countries are unable to refuel Philippine airlines, forcing carriers to carry fuel for return journeys. He indicated long-haul operations face the greatest risk, although grounding is not yet certain. The Philippines’ reliance on imported crude, much of it from the Middle East, increases exposure to supply disruptions and rising fuel costs. Cebu Air announced plans to reduce flights from next month due to higher fuel prices. Regional carriers are also adjusting operations, with Vietnam Airlines suspending some domestic routes, VietJet Aviation reducing flight frequencies, and Bamboo Airways signalling potential service reductions if oil prices remain elevated. Marcos’s comments contrast with the Philippines’ Energy Secretary statement that airlines have sufficient fuel orders and have not requested government assistance following a Department of Energy meeting. Airlines across Asia are preparing contingency measures amid risks of a significant oil price shock affecting aviation operations.

THE PHILIPPINES
Rising diesel prices significantly impacting Manila’s jeepney sector
(24 March 2026) Rising diesel prices linked to the Iran conflict are significantly impacting Manila’s jeepney sector, with pump prices increasing by about 16% on 24 March to a record of PHP 134.30 per litre. Driver Eric Helera reported working up to 18 hours daily while shortening routes to manage fuel costs, with earnings sometimes falling below PHP 500 per day after covering fuel and fixed “boundary” payments to vehicle owners. Diesel price increases described as the most severe experienced have reduced margins, with drivers requiring at least 10 passengers per trip to break even and full capacity achieved only a few times daily. Income declines have forced lifestyle adjustments, including reduced food spending and difficulty meeting household and education expenses. Some drivers have exited the sector, returning to provinces or seeking alternative employment due to unsustainable earnings. Jeepney driver unions have called for fare increases, but a recently approved fare hike was reversed by President Ferdinand Marcos, limiting revenue relief. Consumers are also under financial strain, constraining acceptance of higher fares despite acknowledging driver losses. A government cash transfer of PHP 5,000 is expected but viewed as insufficient to offset rising costs. The sector disruption reflects broader economic pressure from fuel inflation, with operational viability weakening across informal transport services.

THAILAND
Thailand’s exports increase 9.9% year-on-year in February 2026
(24 March 2026) Thailand’s customs-cleared exports increased 9.9% year-on-year in February, below the 15.8% forecast and slowing from January’s 24.4% growth, according to the Commerce Ministry. Growth was driven by electronics and electrical equipment. Imports rose 31.8% year-on-year, resulting in a trade deficit of USD 2.83 billion. Export growth for January–February 2026 reached 17% year-on-year. The Commerce Ministry stated exports are expected to continue growing in 2026, but may slow in March due to higher fuel and transportation costs and the impact of the Middle East war. The ministry will review its full-year export forecast in April, currently projected between a contraction of 3.1% and growth of 1.1%. Shipments to the US increased 40.5% in February, while exports to China rose 0.4%. The ministry maintained its rice export target at 7 million metric tonnes for 2026. The Foreign Trade Department indicated rice exports could fall short due to the war. In a worst-case scenario, a halt in Middle East shipments could reduce total rice exports by 1 million tonnes. Thailand exported 1.34 million tonnes of rice to the Middle East in 2025, with 75% going to Iraq. Rice exports declined 4.16% year-on-year to 1.15 million tonnes in the first two months of 2026. The baht depreciated 3.8% against the US dollar year-to-date, following a 9% appreciation in 2025. The weaker currency supported exporters but did not fully offset rising freight costs.

THAILAND
Tourism outlook weakens due to ongoing Middle East conflict
(25 March 2026) Thailand’s tourism outlook has weakened due to the ongoing Middle East conflict, with foreign arrivals stated to fall by up to three million if the war persists for six months. This would reduce 2026 arrivals from the government’s 35 million target to levels similar to 2023 (28 million) and result in an estimated economic loss of THB 150 billion (USD 4.6 billion), equivalent to about 10% of last year’s foreign tourism receipts. Even if the conflict ends by end-March, Thailand may still lose one to two million visitors. Rising global oil prices are increasing airfares and reducing travel demand, prompting cancellations and lower bookings. Thailand recorded 8.54 million visitors between 1 January and 22 March, down approximately 3% year-on-year. The government is shifting strategy to target high-spending Middle Eastern tourists, aiming for at least 200,000 arrivals, with marketing budgets reallocated from Europe and the US. Middle Eastern visitors spend an average of THB 80,000 per trip, compared with THB 61,000 for Europeans and THB 39,000 for Asian tourists. Flight disruptions have eased, with cancellations declining to fewer than 30 per day. Tourism, which accounts for around 12% of GDP, remains under pressure following earlier disruptions, with 32.97 million visitors recorded last year, down 7.23% year-on-year.

RCEP Monitor

AUSTRALIA
Australia and EU finalize free trade agreement that removes tariffs on key sectors
(24 March 2026) The European Union and Australia have finalised a free trade agreement that removes tariffs across key sectors to expand bilateral trade and diversify export markets. Tariffs on major EU agricultural exports, including wine, fruit, chocolate and processed foods, will fall to zero immediately, while tariffs on EU cheese will be eliminated over three years. The EU will also remove tariffs on most Australian agricultural products, including wine, dairy, grains and seafood, with expanded tariff rate quotas for beef, sheep meat, sugar, rice, wheat gluten, skimmed milk powder and butter. The agreement provides protection for EU geographical indications such as Pecorino Romano and Ouzo, while allowing continued use of certain terms like feta and gruyere by Australian producers under labelling conditions, and permitting domestic Prosecco production with export restrictions phased in over 10 years. Australia will fully liberalise access for EU passenger vehicles, with limited exceptions for trucks subject to phased tariff removal, and will raise the luxury car tax threshold for EU electric vehicles to AUD 120,000, exempting around 75% from the tax. The EU will eliminate tariffs on Australian critical minerals and hydrogen, while Australia will expand investment access in these sectors. The agreement enhances market access for services, including professional, maritime and financial services, by reducing discrimination and expanding opportunities for providers. EU investors will receive treatment equivalent to Australian investors and the most favourable conditions granted to foreign investors, with reciprocal rights for Australian firms to establish and operate businesses in the EU.

SOUTH KOREA
Shortage of Middle Eastern crude oil could force production cuts across plastics, textiles and consumer goods
(24 March 2026) Shortages of Middle Eastern crude oil are constraining naphtha supply in South Korea, disrupting petrochemical production and downstream industries. LG Chem Ltd., the country’s largest petrochemical producer, has suspended one of its three naphtha cracking facilities, with firms considering further shutdowns or reduced operating rates. South Korea sources about 50% of its naphtha from the Middle East, and supply disruptions have driven naphtha prices up by over 60% since the onset of the war, with prices rising from about USD 600 per tonne in January to over USD 1,400. Ethylene prices, a key derivative used in food-grade plastics, have nearly doubled, increasing pressure on packaging-dependent sectors. Instant noodle producers NongShim Co. and Samyang Foods Co. reported remaining packaging material inventories of two to three months and one to two months respectively. Shipping disruptions in the Strait of Hormuz have increased freight costs and exacerbated supply constraints. Industry participants report inventories as low as two weeks, with late March to early April identified as a critical period for supply stability. Panic buying has emerged, particularly for government-regulated garbage bags, with retailers reporting multiple-fold increases in sales and imposing purchase limits. The Environment Ministry has initiated a nationwide inventory inspection, while suppliers report shipping delays. The petrochemical sector, already under restructuring pressure, is seeking alternative feedstock sources from the US and Africa. A prolonged shortage could force production cuts across plastics, textiles and consumer goods, with companies warning of potential retail price increases. Industry representatives indicated that widespread disruption to plastic supply chains could materially affect sectors including food, healthcare, clothing and automotive, with broader economic impact.

AUSTRALIA
Fuel shortages reported at more than 600 service stations across Australia
(25 March 2026) Fuel shortages have been reported at more than 600 service stations across Australia, with around 10% of outlets in New South Wales and Victoria affected. The disruption follows reduced global oil flows linked to the near-closure of the Strait of Hormuz, which has constrained about one-fifth of global supply and driven price increases. Australia, which imports over two-thirds of its fuel, faces additional pressure as key supplier South Korea plans to cap some exports. It has been noted that demand has doubled since the conflict began, although shortages at retail sites are typically resolved within 24 to 48 hours. The government attributed the demand surge to panic buying and anticipatory purchasing rather than structural supply shortages. Fuel reserves stood at 38 days for gasoline and 30 days for diesel last week after stockpile drawdowns. In response, authorities will temporarily relax diesel standards for six months to expand sourcing options to the US, Canada and Europe. Fuel prices have increased, contributing to inflationary pressures alongside recent interest rate hikes by the central bank. The government has also introduced legislation to raise maximum penalties for anti-competitive conduct to AUD 100 million per offence, doubling the previous cap, following concerns that retail fuel prices rose faster than international benchmarks.