Frontier Asia: Better skies, familiar risks: Stay MW in sovereign credit and short USD/LKR

Research evidence excerpt

Frontier Asia: Better skies, familiar risks: Stay MW in sovereign credit and short USD/LKR

J P M O R G A N Asia Pacific Economic Research

09 July 2026

Frontier Asia: Better skies,

familiar risks

Stay MW in sovereign credit and short USD/LKR

EM, Economic and Policy Research

Mahmoud Harb

(65) 6882-1640

mahmoud.harb@jpmorgan.com

JPMorgan Chase Bank, N.A., Singapore Branch

• The recent ceasefire, if sustained, should improve the outlook for frontier Asia, Emerging Markets Strategy

as falling oil prices ease inflation, current account balances improve, and Fariha R Ahmmed AC

growth pressures from supply shortages fade. (44-20) 7134-8537

fariha.ahmmed@jpmorgan.com

J.P. Morgan Securities plc• Policy flexibility should improve significantly, as the recent decline in energy

prices gives central banks confidence that inflation shocks are transitory and Ikue Saito AC

allows governments to remain conservative by phasing out crisis support (65) 6801-3154

measures. ikue.saito@jpmorgan.com

AC• Outturns were less severe than the feared repeat of the 2022-23 crisis due to the Ayomide O Mejabi

shock being short-lived, with most economies having made macro-adjustment (44-20) 7134-9399

progress after the 2022 crisis. ayomide.mejabi@jpmorgan.com

• The policy response to the shock was broadly sound — fuel-price hikes, rate J.P. Morgan Securities plc AC

increases in Pakistan and Sri Lanka, and increased exchange rate flexibility — Nishant M Poojary, CFA

though Bangladesh under-delivered ahead of its February 2026 elections. (44 20) 3493-3859

nishant.m.poojary@jpmorgan.com

• Well-calibrated policy responses have helped build credibility in Pakistan and J.P. Morgan Securities plc

Sri Lanka, while Bangladesh has lagged and Mongolia has been insulated by

its commodity windfall.