Japan faces risks of low growth and high inflation if a prolonged Middle East conflict keeps oil prices elevated and hits the import-reliant economy, analysts say, complicating the central bank’s efforts to push up still-low interest rates.

China is likely to lower its 2026 economic growth target to a range of 4.5%–5.0% while keeping policy supportive, as policymakers shift greater focus toward longer-term structural priorities under the upcoming 15th Five-Year Plan, according to BofA Securities.

Asian stocks fell sharply on Monday after the U.S. and Israel attacked Iran over the weekend, pushing up oil prices and spurring a broader rush out of risk and into safe havens.

U.S. President Donald Trump said on Sunday that attacks against Iran will continue for the time being, and also warned that there will be more American casualties. 

Oil prices jumped 7% to their highest levels in months on Monday as Iran and Israel stepped up attacks in the Middle East, damaging tankers and disrupting shipments from the key producing region.

Malaysia’s Producer Price Index (PPI) dropped 2.9 per cent in January 2026, after recording a 2.7 per cent decrease in the previous month, according to the Department of Statistics Malaysia (DOSM).