‘Small Silver Lining’ in Reduced Consumption in US

Further weakening in the US economy could actually benefit emerging economies by pushing down oil consumption in the world’s biggest market and thus easing global price pressures, according to Supavud Saicheua, managing director and head of research of Phatra Securities Plc.

While reduced oil consumption in US will shrink inflation in emerging markets, the foreign selloff of the region’s stocks is likely to continue because a lot of the funds used to buy stocks in this part of the world come from US and American portfolio managers who need to shore up their domestic liquidity.

“So there is a small silver lining to the extent that inflation might not be such a big monster for emerging markets, although we will pay through reduction in our export demand,” he said.

iStockAnalyst