Middle East risk premium leads to currency depreciation and capital outflows; energy shortages may cause disruption in Asian supply chains; AI exports shift from general trade — 0428 Macro Recap

Amid the US-Israel-Iran conflict, the Middle East faces increased risk premiums, and currencies of some non-oil core economies are under significant depreciation pressure. International capital is withdrawing from regional financial markets and real-economy investment projects. The conflict has led to a decline in oil export revenues and reduced willingness of oil-producing countries to hold US Treasury bonds, which in turn weakens the petrodollar cycle.

Asia has a high dependence on Middle Eastern oil and gas. If the energy shortage persists, it could lead to production stagnation, delivery delays, soaring costs, and even supply chain restructuring or disruption. Southeast Asia and South Asia lack sufficient funds for hedging, and demand-side management policies push up production costs, such as subsidy reductions and increases in industrial electricity prices.

Exports of AI-related products are showing strong growth. Taking China as an example, over half of the above-expected export growth in the first quarter was contributed by AI, and excluding AI goods, exports in various regions did not show significant improvement and even declined slightly. Currently, AI exports are transitioning from processing trade to general trade with higher added value.