The escalating violence in the Red Sea has triggered concerns about its impact on Asia's economic landscape, particularly in terms of inflation and economic growth. According to the Economist Intelligence Unit (EIU), disruptions in the Red Sea supply chain could have significant repercussions for the region. 

These disruptions, attributed to the violence, might reduce up to 0.5 percentage points in Asia's economic growth for the current year. Additionally, they could contribute as much as 0.4 percentage points to the inflation rate across Asia.

EIU's report underlines the susceptibility of Southeast Asian countries like Indonesia, Thailand, and Malaysia to the adverse effects of disruptions in shipping routes caused by the Red Sea crisis.  

After all, these nations heavily rely on exports for economic growth, and with weakened demand from Western markets in the previous year, the current disruptions pose additional challenges and intensify their economic difficulties.

Even a country like China is no exception as VCPost detailed how it already suffered a new blow to its economy rate since 2018 after a signifcant drop in its export sector.

READ NEXT: IMF Says Mexico Is Now the 12th Largest Economy in the World

The Red Sea crisis' impact extends beyond direct trade partners to encompass other regions that heavily rely on imports, particularly those concerning food supplies. Pacific island countries, New Zealand, India, and Pakistan, are among those likely to face indirect consequences, with potential spikes in shipping costs aggravating the situation.

The report also highlights the potential dilemma central banks face in countries such as the Philippines, Australia, and India. The rise in inflation could complicate their efforts to initiate monetary easing measures, posing additional challenges to economic stability and growth.

According to Business Times, the worse thing that could happen is if the extended disruptions in shipping routes may compel manufacturers to rethink how they organize their supply chains. 

Instead of depending on the strained and interrupted supply chains in Asia, they might opt for alternatives closer to where their products are consumed. This potential change could significantly impact regional trade patterns and the interconnectedness of economies in the long term.

READ MORE: Goldman Sachs Says Global Economic Growth in 2024 Will Exceed Expectations