+ Indonesia's relatively limited oil price rise means that the government will still be vulnerable to further international price increases - the worst of both worlds, a rising deficit with higher retail prices and inflation.
+ Thailand has one of highest oil consumption/ GDP ratio of key Asian economies.
+ Rising Inflation: China, India, Taiwan, Singapore, Hong Kong, S.Korea, Indonesia, Thailand, Philippines, Malaysia; even worse, Inflation in double-digits: Vietnam, Pakistan, Sri Lanka, Bangladesh.
+ According to Asian Development Bank and World Bank, inflation is a bigger risk to Asia than U.S. slowdown; Commodity inflation may impact terms of trade for importers/exporters and feed into higher prices, wages.
+ Rising inflation (oil prices), monetary tightening, equity sell-off by foreign investors is causing downward pressure on Asian currencies; India, S.Korea, Thailand, Philippines, Indonesia already intervening in currency market to prevent large depreciation and the resulting inflationary pressure from food and oil prices.
+ Bank Negara’s international reserves were at an all-time high of RM399.92bil as of May 15. The reserves position was sufficient to finance 9.9 months of retained imports and was 7.3 times the short-term external debt. The reserves comprise gold, foreign exchange and other reserves, including special drawing rights. The international reserves had risen by RM64.18bil from RM335.74bil as of Dec 31 last year.+ Malaysia raised fuel prices by 41% in early-June w/ cash transfers for small car owners; move may raise inflation up to 5-7% in the coming weeks, forcing monetary tightening ahead in spite of slowing exports and growth forecast and impact on domestic demand.
+ Taiwan dollar, Malaysian ringgit, Thai baht will perform better due to current a/c surplus, lower capital dependence; Indian rupee, Korean Won, Vietnamese Dong will weaken as high imports impact current a/c deficit.
+ Malaysia's Q1 2008 GDP grew at 7.1% on energy exports and increase in govt wages but Govt has lowered 2008 growth forecast to 5-6% (2007: 6.3%); forecasts by IMF: 5%; ADB: 5.4%; WB: 5.5%.
p/s photo: Haruna Yabuki