Welcome to Devonomics, a CRI newsletter. Each week we round up the most relevant news in Asia’s development finance and add a short take on what they mean for projects, budgets, and people on the ground. We will also include the latest from CRI, including new analysis and event highlights.
The week’s headlines converge on a single uncomfortable reality: the architecture of global resilience is being built under live fire. The new Middle East conflict has cut Strait of Hormuz shipping by 90 percent and pushed oil prices up nearly 50 percent since December, arriving exactly as multilaterals are placing their largest long-horizon bets on Asian integration, energy connectivity, and AI-driven growth. The IMF is counselling agility. ADB is committing $10 billion to the ASEAN Power Grid. And the OECD is quietly flagging that global debt markets, now at 93 percent of world GDP, are more fragile than their record borrowing volumes suggest. The institutions are moving. The question is whether they are moving fast enough.
What Changed This Week
| 90% | Drop in Strait of Hormuz shipping since the new Middle East conflict began, threatening close to half of Asia’s oil imports.IMF, Tokyo Symposium |
| $10B | ADB’s commitment to the ASEAN Power Grid over the next decade, the anchor number in its new role as Southeast Asia’s strategic financing partner.ADB |
| $29T | Projected global borrowing in 2026, rising from a record $27T in 2025, as AI capex and sovereign funding needs accelerate simultaneously.OECD Global Debt Report 2026 |
| 1.8% | Long-run Asian GDP gain the IMF models from reducing non-tariff barriers, an opportunity too large to leave on the table.IMF, Tokyo Symposium |
Lead Analysis: IMF Tokyo – Coping and Thriving When the Next Shock Is Already Here
IMF Managing Director Kristalina Georgieva’s speech at Japan’s Ministry of Finance symposium arrived under conditions that stress-tested its own argument. She laid out a three-part framework for a permanently fluid world, strong institutions, fiscal buffers, agility, and within the same speech, the Strait of Hormuz was down 90 percent. For Japan, the numbers are acute: nearly 60 percent of oil imports and 11 percent of Natural Gas transit the Strait. The IMF’s rule of thumb, every 10 percent sustained rise in oil prices cuts global output by 0.1–0.2 percent, is now doing live arithmetic across every finance ministry in Asia.
The long-run agenda runs on three tracks. On AI, the IMF holds to its estimate that Asia could unlock 0.8 percentage points of extra annual growth, but only with the enabling infrastructure: broadband, data centers, retraining systems, and capital markets capable of funding private risk. On demographics, Japan and Korea are aging fast while India and Southeast Asia remain young for now; the risk is that AI eliminates entry-level work precisely as the largest cohort of developing-world youth arrives in labor markets. On trade, her prescription is blunt: the 1.8 percent long-run GDP gain from reducing intra-Asian non-tariff barriers is an opportunity to be seized. Japan, the IMF’s second-largest shareholder and largest donor to its capacity development and concessional lending, underpins the institutional architecture that makes all of this possible.
Takeaway: Georgieva’s Tokyo speech held two time horizons simultaneously: the immediate shock demanding fiscal buffers and central bank agility, and the decade-long transformation demanding institutional investment now.
Brief 1: ADB Steps Up for ASEAN — and the Power Grid Is the Opening Bid
ADB President Masato Kanda arrived at the 32nd ASEAN Economic Ministers’ Retreat in Manila with a clear reframing: ADB as Southeast Asia’s “premier financing and advisory partner,” not merely a project lender to individual sovereigns. The commitment covers three pillars, dedicated financing for ASEAN-aligned operations, upstream project development to ensure initiatives are investment-ready, and advisory coordination with ASEAN sectoral bodies.
The headline number is $10 billion over the next decade for the ASEAN Power Grid, one of the most technically and politically complex infrastructure projects in the region, connecting national grids across ten countries with different energy mixes and regulatory frameworks. Kanda named the Middle East conflict directly as an immediate headwind, signalling ADB stands ready to respond if higher energy costs force emergency calls on multilateral support. The upstream project development pillar is the quieter bet: regional initiatives fail not for lack of money but for lack of investment-ready projects when the money arrives.
Takeaway: ADB’s ASEAN commitment is the most operationally concrete response this week to the IMF’s regional integration thesis. The $10 billion Power Grid figure is the anchor, but the project development function is the bet that may matter more in the long run.
Brief 2: The Debt Machine and the AI Bet — What the OECD Is Watching
Global borrowing hit $27 trillion in 2025, a record, and the OECD projects $29 trillion in 2026. The bond market stands at $109 trillion, or 93 percent of world GDP. On the surface: low volatility, improving liquidity, corporate spreads near historic lows. Underneath, the OECD’s Global Debt Report 2026 tracks a structural fragility. As central banks have unwound their balance sheets, the marginal sovereign debt buyer has shifted from price-insensitive institutions to price-sensitive ones, hedge funds, households, and leveraged investors. That transition raises the probability of volatility spikes when shocks arrive.
AI is reshaping the picture at scale. Nine hyperscaler firms raised $122 billion from bond markets in 2025 alone. Their projected combined capex from 2026 to 2030 is $4.1 trillion, if half is bond-financed, these nine firms could represent 15 percent of average annual global non-financial issuance. The connection to development finance is direct: every MDB bond and every ASEAN infrastructure deal competes in the same market. If hyperscaler issuance reprices that market, and if the Hormuz shock drives sovereign borrowing higher, the cost of development capital rises precisely when demand for it is greatest.
Takeaway: Record borrowing and record AI capex are happening simultaneously in a market becoming structurally more fragile. That is the background risk no individual deal announcement mentions, and the one that most directly threatens the financing environment multilaterals depend on.
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Siana Kazi is a Development Finance Fellow at the Centre for Regional Integration and curates Devonomics, an Asia-focused policy brief. Her focus is on South–South cooperation, EU-Asia connectivity, and the implications of trade, industrial, and green-transition policies for regional integration.
