Home  >>  Daily News  >>  ASEAN ANALYSIS

Oil, food and money

 
AseanAffairs     24 February 2011

Without doubt the biggest story in Asean today is the same story worldwide-the ongoing struggles in the Mideast that are sure to raise the price of oil and take a bite out of Asian economies.

So far this week, Asian currencies have strengthened as there are expectations that central banks in the region will raise interest rates to offset the rise in oil prices.

The oil issue follows after the inflation jump in several Asian countries. Prices in Malaysia rose 2.4 percent as compared to last year, while inflation in Singapore rose 5.5 percent –a two-year high.

In Vietnam, the main task of the government will be to contain price increases. The country’s currency was devalued just two weeks ago.

Throughout Asean, food prices and supply have been an issue. Indonesia recently imported a substantial amount of rice from Vietnam with more to come from Thailand.

In Thailand, the primary cooking oil, palm oil, has vanished from store shelves and the Thai government has taken action to import supplies so that the price can be maintained at 47 baht (US$1.60) a bottle.

Despite these issues, the International Monetary Fund in a forecast issued last month expects developing economies in Asia to expand 8.4 percent this year, compared with 4.3 percent for Latin America and 2.5 percent for advanced countries.

By

Paul A. Ebeling, Jnr