Energy price spike is bad news for emerging Asian economies: Report

THE latest energy price spike will have a broadly negative impact on emerging Asian economies, although inflation risks generally remain contained, analysts from BNP Paribas said in a report on Thursday (Oct 21).

Oil and gas exporters Indonesia and Malaysia are expected to get a fiscal boost from higher prices, but Thailand faces a significant negative impact based on the economic situation there, they added.

While higher oil prices would support government revenues and currencies in net exporters of energy, the prices will likely lower growth, worsen trade accounts and raise producer prices across Asia. So even energy exporters could suffer on the back of stifled global demand, the report warned.

Still, petroleum import-dependent Thailand may be among the worst-hit countries, said the analysts, who cited factors such as a loss of tourism earnings that could affect up to 14 per cent of the economy; there is also "the relatively large negative oil balance in its external accounts".

The report noted that fuel subsidies in economies such as Indonesia, Malaysia and Thailand may spare consumers, but are still placing the burden on countries' fiscal accounts.

"We expect an inflationary impact everywhere, but much will depend on the stage of the business cycle. Almost everywhere in Asean, the hit to producer prices is likely to outstrip the impact on consumer prices," the analysts added.