Asia faces the threat of higher inflation, slower growth and tougher times for exporters after oil prices hit new highs and the dollar plunged last week.
Farmers, miners and oil companies could benefit from high commodity prices. But most of Asia is dependent on imported energy and raw materials, and even some oil-exporting countries such as Malaysia have other industries that could suffer.
“We are witnessing an increase in inflationary pressures across the region, and this is becoming a major challenge for the economies that are also potentially face the downside risks of a slowdown in the United States,” said Huang Yiping, a Citigroup economist in Hong Kong.
Japan, China and other economies export-oriented that sell in the American market attended erode the gains that the dollar fell. He plunged to below 100 yen last week for the first time in 12 years and hit 7.1 yuan, its lowest level of the national currency against China since 2005, when the current system of exchange rate has begun.
Toyota Motor Corp. said its profits for the current year will decrease by about 35 billion yen (350 million dollars, 225 million dollars) for each of yen that the dollar fall.
“With a high yen, exports are likely to fall, which will reduce corporate profits and lower stock prices,” said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities Co. in Tokyo.
Those concerns have sent Japanese stocks tumbling on 2 1/2-year low, fueling alarm among investors across Asia who fear the United States _ a huge export market _ is in the process of sinking in a recession.
In China, exporters have been affected by the rising costs of 16.5 per cent and an increase in the yuan against the dollar since mid-2005. Plants that depend on selling low-priced furniture, toys, shoes and other goods to American consumers have dismissed thousands of workers.
Commerce Minister Chen Deming warned last week that export growth could slow if the yuan rises further against the dollar.
China has frozen retail prices of petrol and diesel, consumers shielding global crude prices, which reached a record US $ 111 a barrel last week.
But factories and mills are pinched that the market set the price of coal, iron ore and other materials surge. Higher costs that hamper China’s efforts to curb consumption and the acceleration in inflation to 8.7 percent in February, its highest level in nearly 12 years. This is due to a jump of 23.3 percent in food prices that hit China hard poor majority.
Beijing has imposed price controls on food products, and tries to increase production. But wholesale prices are edging, suggesting consumers could face other through increases in the cost of living.
Vietnam, Indonesia, Malaysia and Sri Lanka also face a risk of higher inflation due to higher energy costs, “said HSBC economist Peter Morgan in Hong Kong.
“They inflation rates very high at the beginning,” he said.
Asian buyers may pay higher prices for oil, gold and other commodities for some time that global prosperity leads to an explosion in demand, “said Tim Condon, chief economist for Asia ING in Singapore.
“We were in a bear market for commodities for 80 years, until the early 21st century,” said Condon. “We were in a bull market for five years. I think there is more room to run.”
The good side, poor farmers in Indonesia, Malaysia and Thailand are paid more for rice, palm oil and other crops, said Marshall Gittler, chief Asia strategist at Deutsche Bank Private Wealth Management in Singapore .
“It’s going to redistribute the wealth in these countries, and it may indeed be a good thing for them,” said Gittler.
Even oil producers like Malaysia that the position to take advantage of rising prices in the face of a decline.
Malaysia subsidizes retail gasoline, so the rise in crude oil prices will increase costs in its treasury, “said Jeff Brown, general manager of Global Energy FACTS Singapore. And he noted that Malaysia’s exports of personal computers, chips and other technology goods to the United States and Europe, where sales could slow energy prices rise.
“So I am still reluctant to say that Malaysia a beneficiary of the oil boom, he said.
In Japan, airlines have reacted to higher oil prices by increasing the fuel surcharges on tickets of nearly $ 42 (27) per passenger, effective April.
In Thailand, state-owned oil company PTT PCL has requested the Government to reduce the amount of fuel, it is necessary to hold in reserve to 30 days supply to 18 days. The company said that possible, would avoid shortages of diesel fuel by letting sell cheaper stocks purchased earlier without having to replace them, at high prices today.
Poor resource in South Korea faces an oil shock particularly serious because its currency, the won, is at a 26-month low against the U.S. dollar, while he must pay for greenbacks Gross, said Kang Dae-chang, an economist at the Hyundai Research Institute.
“In this situation,” Kang said, “the economy of Korea is facing two serious problems: Possible slowdown in the economy and inflation.”