Reducing Middle East Energy Dependence: A Sustainable Policy Choice

Reducing reliance on Middle Eastern energy supplies and increasing investment in domestic production, storage, and renewable energy could be the most sustainable policy response to the current energy price shock, according to a report by Capital Economics. According to Jin10, Gareth Leather, a senior Asia economist at the institution, highlighted that measures to curb inflation, such as subsidies in Indonesia or price caps in South Korea, offer limited incentives for energy conservation and come with high fiscal costs. Countries with weaker fiscal positions may pass higher costs onto consumers, potentially driving up inflation, hindering economic growth, and increasing the risk of social unrest.