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Economics
On a clear day
• US demand growth has dropped to zero over a three year period. Oil
prices have tripled over the same time frame. Disaster planners could
not have invented a more testing scenario
• Yet growth in Asia remains stronger than it should be even on a clear
day
• Demand, mostly Asian, explains both puzzles. Asian demand kept
growth alive and demand ‘survived’ the rise in oil prices because it
drove the rise in oil prices
• Oil prices are driving inflation in the US and Europe. But data clearly
show that the price of oil is no longer made in America or in Europe.
It is made in Asia
• G3 central banks may have to accept an inflation rate made in Asia too.
That, or a permanently lower growth rate
On a clear day, “Asia” ought to grow by about 7% per year. Some countries
grow faster of course (the young turks like China and India), some slower (the
graduates of the early stages of development like Singapore, Hong Kong, Taiwan
and Korea) and some in between, like Thailand, Indonesia and Malaysia. Put
them all together though and in simple average terms – better than weighted
average terms for many purposes – you’re talking about a 7% growth rate. On
a clear day.
But the skies haven’t been so great lately. In fact, Asia has collided head-on into
what most have for a long time considered to be its two greatest threats to
growth: a US on the brink of recession, or so it is said, and indisputably record
high oil prices in real and nominal terms.
World's largest oil importers and consumers
mn bbls / year, 2006
Country
Imports (net)
World
rank
Consumption
World
rank
US 4,510 1 7,551 1
Japan 1,836 2 1,883 3
x China 1,225 3 2,628 2
Germany 918 4 973 5
x Korea 787 5 794 9
France 690 6 716 12
x India 627 7 939 6
Italy 572 8 632 14
Spain 570 9 581 16
x Taiwan 343 10 347 19
Netherlands 341 11 369 18
x Singapore 301 12 305 22
Turkey 228 13 244 23
x Thailand 217 14 339 20
Source: US EIA: http://tonto.eia.doe.gov
Nomenclature
References to Asia in
this report adhere to
the follow conventions:
Asia 10: CH, HK, TW,
KR, SG, MY, ID, TH,
PH, IN
Asia 9: Asia 10 less IN
Asia 8: Asia 10 less IN
and CH
Asia Hi-tech5 (HT5):
KR, TW, SG, MY, TH
Asean 5: SG, MY, TH,
ID, PH
Asean 4: Asean 5 less
SG
Eurozone: EU12
G4: Asia10, US, JP, EZ
ECONOMICS
David Carbon • (65) 6878 9548 • davidcarbon@dbs.com
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