What higher oil prices might mean for Asean economies

ASEAN economies are in the part of the cycle where growth has cyclically picked up and inflation has also risen, although to still manageable levels and remaining within or below central banks' inflation targets.

With oil prices veering closer to US$70/bbl since the start of the year, there have been concerns about macro implications from oil prices staying higher for longer.

Specifically, would the change in terms of trade hurt the growth recovery, and would higher oil prices pose upside risk to inflation and hence policy rates? In addition, what implications would higher oil prices have for fiscal balance sheets?

On the growth front, higher oil prices are positive for Malaysia, but less so for the rest of Asean. Indeed, Malaysia is the sole net…