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6 Jan 2015

International Economy

Cheap Oil Should Aid ASEAN Growth of 4.7-5.8% (Current Issue No. 2577 Full Ed.)

Steep declines in global oil prices during 2H14 should be beneficial to ASEAN, which will likely see higher current accounts and better fiscal balances as a consequence. Oil prices have slumped 48 percent to a five-year low of only USD54.2/barrel in December, from USD105/barrel in July 2014. We at KResearch forecast that Thailand's 2015 current account surplus will be around 2 percent of GDP. Falling inflation and living costs will absolutely boost private consumption, adding to opportunities to undertake monetary policy that can stimulate the economy. On the other hand, cheaper global oil prices will possibly incur indirect negative impacts to ASEAN's economic relationships with large energy producers, e.g., Russia and OPEC member nations.
KResearch also estimates that slumping oil prices, along with burgeoning FDI within ASEAN – that is considered the bloc's growth-enhancer owing to the fact that it remains one of the top FDI recipients – should enhance the bloc's economic future. ASEAN economic expansion this year could reach 4.7-5.8 percent.

Aside from the oil issue, challenges facing ASEAN economies during 2015 will include a still-fragile global economy and US fine-tuning of their monetary policy that will inevitably affect ASEAN performance, as would economic restructuring in some member states that will need to be watched because it will have bearing upon the sustainability of their future growth.

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International Economy