ASEAN's Ong says oil above $60 may cut growth to 4.5%<\/p>\n
Sara Webb, Bloomberg\/Jakarta<\/p>\n
Economic growth among members of the Association of Southeast
\nAsian Nations (ASEAN) may slow by as much as 1.5 percentage point
\nthis year if the price of oil remains above US$60 a barrel, said
\nSecretary-General Ong Keng Yong.<\/p>\n
Ong said ASEAN economies may expand as little as 4.5 percent
\nthis year, with high oil prices also increasing the cost of the
\nsubsidies their governments provide to make fuel affordable.<\/p>\n
\"ASEAN member countries are horrified by such a high oil
\nprice,\" he said in an interview with Bloomberg in Jakarta on Aug.
\n16. If the oil price stays above $60 a barrel \"there will be a
\nnet negative impact on ASEAN.\"<\/p>\n
Crude oil prices that have gained 36 percent in the past three
\nmonths have stunted consumer spending and eroded growth in
\ncountries including Thailand and the Philippines. Indonesia,
\nSoutheast Asia's biggest economy, expanded at a slower pace for a
\nsecond straight quarter in the three months ended June, the
\ngovernment said on Aug. 15.<\/p>\n
\"The higher oil price represents the biggest single cloud on
\nthe horizon,\" said David Cohen, director of Asian economic
\nforecasting at Action Economics in Singapore. \"It squeezes
\ngovernment budgets and while it's better to trim subsidies so
\npeople face the true market price for fuel, that will squeeze
\nhousehold spending.\"<\/p>\n
The economies of ASEAN's 10 members had been forecast by the
\nAsian Development Bank (ADB) to expand 5.7 percent in 2005, Ong
\nsaid in a speech in Siem Reap, Cambodia in July. ASEAN economies
\ngrew 6.2 percent last year.<\/p>\n
With crude oil trading above $60 a barrel, regional growth may
\nbe cut by between 1 and 1.5 percentage points to as low as 4.5
\npercent this year, Ong said in the interview. \"It will be a rough
\nride,\" he said. \"Our growth will go down and we will have less
\nprosperity.\"<\/p>\n
Crude oil for September delivery reached a record $67.10 a
\nbarrel in New York on Aug. 12. The price rose as much as 50
\ncents, or 0.8 percent, to $63.77 a barrel in after-hours
\nelectronic trading on the New York Mercantile Exchange. It was at
\n$63.69 at 1:10 p.m. Singapore time.<\/p>\n
Goldman Sachs Group Inc., the third-biggest U.S. securities
\nfirm by market value, raised its oil forecast for 2006 to $68 a
\nbarrel and said prices will stay at about $60 for several years
\nbecause companies are not investing enough to boost supply.<\/p>\n
Merrill Lynch & Co., the world's No. 2 securities firm, raised
\nits oil price forecast for 2006 by 24 percent to $52 from $42 a
\nbarrel, citing limited spare production capacity and rising
\ndemand.<\/p>\n
Ong said higher oil prices are leading to bigger fuel subsidy
\nbills for some of ASEAN's biggest economies. ASEAN includes
\nThailand, Malaysia, Singapore, Brunei, Cambodia, Myanmar, Laos,
\nVietnam, Indonesia and the Philippines.<\/p>\n
\"You can see it affecting Indonesia already, which was a net
\nexporter and is now a net importer of oil,\" Ong said. \"You can
\nsee it in Thailand where the prime minister is worried about
\ngrowth.\"<\/p>\n
Indonesia's $258 billion economy grew 5.5 percent in the
\nsecond quarter from a year earlier, after expanding a revised 6.2
\npercent in the first, the government said on Aug. 15.<\/p>\n
Indonesian President Susilo Bambang Yudhoyono on Aug. 16
\nalmost doubled the government's fuel-subsidy forecast for this
\nyear to as much as Rp 140 trillion (US$14 billion) because of
\nrising crude oil prices.<\/p>",
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