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Skyrocketing oil prices have started to send shockwaves through Asian economies, with some saying that Indonesia is on the verge of a financial crisis amid surging foreign exchange rates. Wall Street experts are bringing out a slew of reports warning high oil prices will deal a severe blow to Asian economies, which are particularly susceptible to external shock.
The Indonesian rupee plunged over 9 percent to 18,000 rupees to the U.S. dollar on Tuesday morning, the largest fall since January 1999 and the ninth straight day of losses. The reason is the Indonesian government¡¯s increased financial burden from oil subsidies to businesses. Although the Southeast Asian country is a member of OPEC, it imports petroleum as demand grows. Not only is the rupee plummeting, the country¡¯s stock market is crashing as well. Indonesia, along with Thailand, was an epicenter of the 1997 Asian financial crisis.
But pundits are raising concern about the overall Asian economy as well. Wall Street investment bank Lehman Brothers on Monday lowered its economic growth outlook for Malaysia, Indonesia and Taiwan by 0.3-1.0 percentage points.
The investment bank lowered economic growth prospects for the region except Japan from 6.5 percent to 6.4 percent. Although, any direct warnings have yet to be raised against Japan and China, the region¡¯s two largest oil importers, their burden is also growing. Japan¡¯s oil import spending surged 48 percent in June, and China¡¯s 61 percent in July.
In Korea, a strong won has so far offset soaring oil prices to some degree. But the Bank of Korea said late last month higher oil prices would reduce the country¡¯s economic growth rate for this year by 0.8 percentage points. The Korea Development Institute also estimated that a 10 percent increase would cut GDP by around 0.2 percentage points. Moreover, any impact of the high oil price shock on the world economy would also have negative effects on the country¡¯s exports.
(englishnews@chosun.com )
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