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Malaysia, Thailand most at risk from high oil prices

Malaysia and Thailand would be among the Asian economies worst hit if oil prices stay at US$40 a barrel, a new study forecast yesterday.

Malaysia would stand to suffer a 1.2 percent cut in growth next year and a sharper 1.7 percent drop in 2006, according to London-based Dresdner Kleinwort Wasserstein Securities, part of the Dresdner Bank Group.

Thailand's loss in GDP was predicted at 1.3 percent next year and 1.2 percent the following year.

"Other major Asian economies would suffer similarly," the study said. "South Korea and Hong Kong, for example, would see GDP growth drop 0.7 percent and 1.3 percent respectively in 2006," the study said.

Oil prices have risen alarmingly above US$28 a barrel at the start of the year.

Japan would have 0.5 percent shaved off its growth next year, followed by a decline of 1 percent in 2006 if prices remain above US$40 a barrel.

China's increasing dependence on oil makes it "very vulnerable to a slowdown in growth if oil prices were to remain persistently high," the study noted.

The US would lose 0.2 percent in growth next year and 0.5 percent the year after.
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