Soaring oil prices bigger threat to Asia than China slowdown =

Soaring oil prices bigger threat to Asia than China slowdown =

Deutsche-Presse Agentur Singapore

Soaring oil prices pose a bigger threat to Asia than a slowdown in China, potentially upsetting the current economy recovery, a Citigroup report said on Wednesday.

There is little sign that China's fast growth will come to a screeching halt, but an oil price shock which persists could prove worrying for many of the region's economies, the report warned.

The Asia Economic Outlook underscored the view that growth is moderately very slowly in China, but the hike in oil price fanned partly by China's rising demand could be another story.

"No country in Asia would see a surge in growth from higher oil prices, with the possible exception of Vietnam," the report said.

Thailand, the Philippines, Malaysia and Indonesia would see growth drop by about 0.6-0.8 percentage points by the fourth quarter and through the first half of next year, "sizeable but manageable effects", Citigroup said.

Inflation effects would likely be in the order of 1 percent for the hardest hit economies, it added.

Oil prices leapt to a record US$42 a barrel in New York on Monday in the wake of Saturday's terrorist attack in Saudi Arabia, the highest in 21 years of crude trading on the New York Mercantile Exchange.

The report does not believe high oil prices will last because Saudi Arabia and the rest of the OPEC oil products are likely to expand supply.