Higher Oil Prices Could Produce A Recession In Asia

Stronger than expected growth in China in the June quarter may give the impression everything is ok in terms of Asian growth, but Morgan Stanley’s resident bear Andy Xie suggests there are reasons to be concerned about the region’s future growth outlook.

Much of it ties in to the oil price, as Xie notes the stronger oil price has a two-pronged impact on Asia. Firstly, it results in lower exports because of higher gas prices consumers are being forced to pay in countries such as the US, which is the single largest market for Asian production. This simply forces these consumers to cut consumption in other areas. As a result, they are buying less of the goods produced in Asia.
FN Arena