Manufacturers are panicking, too. Textile factories in Bangladesh account for around 13% of GDP. Bosses say input costs are up by 10-15%, because of costlier diesel and petrochemical-based dyes. The country’s overall factory output is down by around 30-40%, says an industry body. Calbee, a snackmaker in Japan, has rolled out black-and-white packaging to offset the rising cost of naphtha—a petrochemical feedstock largely sourced from the Gulf. The scarcity of naphtha has already forced several Asian plastics producers to declare force majeure on their contracts. Inflation in the Philippines jumped to 7.2% in the year to April; GDP growth in the first quarter of 2026 slowed to 2.8%, the lowest since the pandemic. It is a harbinger. The UN thinks a prolonged war could shave up to 3.6% from GDP in South Asia. Food-price inflation in India, Pakistan and Sri Lanka this year could exceed 10%, says the Kiel Institute, a German think-tank. All this is battering government finances. It is costing India roughly $150m a day to keep fuel prices steady. The government may also spend around $4.3bn on subsidies for fertiliser during planting season. Indonesia is spending around $60m a day on energy subsidies. Holding pump prices flat with crude at $100 a barrel would cost Asian governments around 1% of GDP a year, according to the Centre for Global Development, a think-tank in Washington.
Few Asian countries can keep this up. But letting prices rise is fraught. Farmers in India expect the government to keep subsidising fertilisers (despite Mr Modi’s plea to cut usage in half). Previous attempts by Mr Modi to reform agriculture have been thwarted by mass protests. Across Asia, officials worry that rising prices will trigger disorder of the sort that toppled Sri Lanka’s government in 2022. Since the war in Iran began, dozens of protests have erupted in Pakistan, Bangladesh, the Philippines and even in South Korea, according to ACLED, a monitor based in America (see chart 2). As well as encouraging less use of fuel and other consumables, governments are hunting out alternative supplies. That could have consequences that last long after the war has ended. Thailand has been buying more oil from places such as Brazil and Libya. Asian countries are making more use of biofuels. Some, such as Singapore, are investing in renewables. Some Asian countries are benefiting from this scramble. Australia, a big coal and natural-gas exporter, is stepping up purchases of refined fuels in exchange for shipping more of its natural resources. It has secured new deals with Brunei, Japan, Malaysia, Singapore and South Korea. Another relative winner could be China. It not only stands to sell more solar panels and wind turbines, but is also wielding influence through its fossil fuels. Despite being the world’s biggest importer of crude, the country sits on vast oil reserves, giving it big buffers and diplomatic clout. This month China allowed refiners to ship some petrol, diesel and jet-fuel cargoes abroad, easing a ban imposed earlier in the war. Reports suggest the first shipments will head to Vietnam and Laos, which have friendly relations with their northern neighbour. But even American allies have come calling. On April 29th Penny Wong, Australia’s foreign minister, secured a deal for jet fuel on a trip to Beijing. Indeed, plenty of Asian countries now see opportunity in drawing closer to one another. At a recent summit in the Philippines, South-East Asian leaders talked of creating a shared fuel stockpile. And on May 3rd the Asian Development Bank pledged to mobilise $50bn by 2035 to help stitch together Asian power grids. This could cut prices and boost energy security.
It “would have made the last two months a lot easier”, says Eugene Toh from Singapore’s Energy Market Authority. Asian governments have long been wary of sharing their electricity, and fearful of any system that might give next-door countries control of their supplies. Yet now that they are hostage to events thousands of miles away, the squabbles that frequently break out between Asian neighbours no longer look quite such a threat. ■ For exclusive coverage of Asian politics, economics and security, sign up to Asia Bulletin, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com//asia/2026/05/14/the-gulf-war-will-change-asia-for-good
Meet Anno Takahiro, founder of Japan’s hottest political party The software engineer and sci-fi writer wants to use AI to reshape politics May 14th 2026 “CONTINUOUS INTEGRATION”, a prizewinning science-fiction story published in 2019, is about a figure skater who applies software- development methods and AI to optimise athletic performance. Its author, Anno Takahiro, a software engineer and serial AI entrepreneur, has since founded the hottest political startup in Japan: Team Future (Mirai), a techno- optimist outfit that broke through in recent lower-house elections. Mr Anno hopes to bring the same engineering mindset to government. Mr Anno entered politics in 2024 with a quixotic campaign for governor of Tokyo. He finished fifth but drew attention with his use of AI and social media to solicit feedback from voters. Last year he founded Mirai and won a
seat in the upper house. Earlier this year, Mirai picked up 11 seats in the lower house. While still small—the ruling Liberal Democratic Party holds 316 seats in the lower chamber—Mirai has become a new force in Japanese politics. It is also one of the first political parties anywhere to run successfully on an explicitly AI-friendly agenda. For Mr Anno, AI offers the solution to Japan’s demographic challenges. With a shrinking, ageing population, the thinking goes, Japan needs to automate more, faster. Mr Anno believes Japan has several advantages. Fears of an AI jobs apocalypse are less acute than elsewhere, given labour shortages. Attitudes towards AI are relatively positive. When Japanese think of AI, many “see it as a partner”, Mr Anno says: they think not of the Terminator, a rogue robot, but of Doraemon, a friendly robot helper in a Japanese anime series. Mirai also wants to apply principles of software engineering to improve government itself. Drawing inspiration from Audrey Tang, a pioneering former digital minister in Taiwan, Mr Anno speaks of using technology to “create a new form of democracy”. One element is digitisation to reduce paperwork and improve efficiency. But the party is also experimenting with novel forms of participatory democracy. Mirai has launched a “broad listening” effort, which involves using AI tools to gather and process large volumes of citizen input. Mr Anno asks for feedback using his social-media accounts, which direct followers to an AI-based interview platform. The party uses AI tools to analyse the results. “We’ve started to gather feedback at a speed, breadth and depth never seen before,” he says. The party’s appeal lies in its blend of future-oriented techno-optimism and pragmatic technocracy. Mr Anno calls himself “neither right nor left”. Mirai looks and feels younger than competitors: the average age of its candidates this year was just 40 (the average age of Japanese lower-house members is 55). Mirai was the only party to oppose cutting the consumption tax, saying it would undermine Japan’s future fiscal position. Where populist upstarts can be combative, Mr Anno is a gentler kind of insurgent. He promises to upgrade the operating system, rather than tear it
down. Such messaging has so far resonated mostly with a base of younger, urban professionals. “The politicians I’ve seen up to now have, inevitably, pitted ‘us’ against ‘them’, but with Mirai, the only thing they really value is the facts,” says Aizawa Seiko, a 32-year-old in Tokyo. To continue growing, Mirai will need to reach a broader constituency. The party plans to field candidates in local elections in early 2027, hoping to expand its base. Ultimately it will need to demonstrate that its new form of democracy can deliver better results than the old one. Debugging politics may prove harder than writing sci-fi or software code. ■ For exclusive coverage of Asian politics, economics and security, sign up to Asia Bulletin, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com//asia/2026/05/14/meet-anno-takahiro-founder-of-japans- hottest-political-party
India’s legendary hill towns are sinking Overdevelopment threatens many Himalayan states May 14th 2026 WHEN THE temperature rises, Indians head upwards. In the scorching month of May, many venture to famous hill towns—none better known than Shimla, a resort in the foothills of the Himalayas which British colonial rulers used as their summer capital. Urbanites chase fairy-tale scenes of pine forest, snow-capped peaks and mischievous macaque monkeys. That is only part of what they find. On a recent visit to Shimla, your correspondent sat in a high-altitude traffic jam all the way into the centre. These days the city’s Tudor-style town hall looks onto a branch of Domino’s Pizza. Punters watch the sun set over the mountains from the terraces of bars that blare songs by Lady Gaga.