An oil slick on the road for Asian consumption

Asian consumers have taken four years of rising oil prices largely in their stride, but this resilience is being put to the test as the price soars above $70 once more, raising worries about sustained high energy costs.

The difference between now and the last time oil climbed above $70 a barrel, in August 2005, is that countries have cut back fuel subsidies and exposed their consumers more to the rise in prices.

..Vehicle sales in Indonesia fell short of 80,000 in the first quarter, nearly 45 percent down on a year earlier.

In Thailand, high fuel costs and political turmoil pushed consumer confidence in March to its lowest level in more than two years, while South Korean consumer confidence dipped in March for a second straight month to a six-month low.

Domestic demand accounts for more than half of South Korea’s gross domestic product and the country’s finance minister said this month that oil prices and the strength of the won were the two main risks facing the economy.

“Asian economies are in a pretty stable environment and GDP growth is holding up well,” said Jimmy Koh, head of economics and treasury at United Overseas Bank in Singapore. “But if you look at the absolute amount, I’m sure that one way or another, oil prices at $70 will be more painful than when oil was at $60.”

Reuters