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The global economy is undergoing a profound transformation marked by geopolitical fragmentation, persistent conflict, and strategic realignments. From the Russia Ukraine war to instability in the Middle East, these developments are no longer peripheral they are central drivers of macro-financial risk. For South Asia, a region structurally dependent on energy imports, remittance inflows, and external financing, the consequences are immediate and deeply embedded within the banking system.
What is unfolding is not a routine economic cycle but a systemic stress transmission where external shocks are increasingly dictating domestic financial stability.
I. Transmission Channels: From Global Conflict to Banking Stress
1. Energy Shock → Inflation → Interest Rate Tightening
South Asian economies remain highly exposed to global energy markets. Countries such as Bangladesh, Pakistan, and Sri Lanka import over 80–90% of their fuel requirements, making them acutely vulnerable to oil price volatility. In recent periods, crude oil prices have fluctuated widely within the $75–$100+ per barrel range, amplifying import bills.
https://thedailyexpress.news/news/business/1f13576b-eec3-6440-8c96-67cdd6b0d82e