News / Asia

Economists Warn Higher Oil Prices Will Worsen Asia's Food Inflation

Central Illinois farmer Bob Hogan climbs back into his combine while harvesting soybeans in Pawnee, Illinois, October 7, 2010 (file photo)
Central Illinois farmer Bob Hogan climbs back into his combine while harvesting soybeans in Pawnee, Illinois, October 7, 2010 (file photo)
Ron Corben

Global oil prices have spiked in recent days in response to political instability in the Middle East and North Africa. 

Asia's export-driven economies, dependent on imported oil, are bracing for higher inflation as global oil price tops $100 a barrel.

Aynul Hasan, a senior economist at the United Nations Economic and Social Commission Asia Pacific, says oil prices now depend on how the political turmoil unfolds in the Middle East.

"High oil prices very much depend on how soon things will settle down," Hasan explained.  "Obviously in this uncertainty there will be short-term disruption. Many countries have the buffer stock which can carry on for a few weeks. But if this carries on for longer, then definitely this will have an impact. Let's hope that this is not the case."

Hasan says oil costs could accelerate the rise in food prices, caused by poor crops in some areas and rising demand in many countries.

The World Bank has warned that food prices are dangerously high and seem set to continue rising. The higher prices already are affecting millions of Asia's poor. World Bank and UNESCAP economists predict more people will fall into poverty due to higher food costs in the coming year.

Supavud Saicheua, an economist with Thai stock brokering house Phatra Securities, says Asia's economic growth - largely dependent on exports - is vulnerable to sharp increases in oil prices.

"If you argue that the high oil price is primarily supply shock because of concern about Libya and other oil producing countries unable to produce, then that's very bad because if you have global slowdown and high oil prices then, it will hit Thailand and the rest of the region very hard," said Saicheua.

Most Asian countries are net importers of oil, including the manufacturing powerhouse China.

In July 2007, the aviation industry was hard hit when oil prices reached a record $147 a barrel. Then the global economic slump in 2008 led to sharp declines in passenger traffic and more losses for the industry. Airline shares have fallen in recent days as investors feared aviation profits may soon drop again.

Supavud says the oil commodity futures market expects at least six months of uncertainty before the market returns to normal.

World oil demand amounts to around 90 million barrels a day.  Libya contributes about one million barrels.

Higher food prices and poor economic conditions have contributed the discontent of many of the protesters across the Middle East. In East Asia, many governments are on the watch for inflation and have taken steps such as raising interest rates and curtailing capital inflows to tamp it down.

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Goodbye, New York

This is what the fastest-growing big cities in America have in common More

Job-Seeking Bangladeshis Risk Lives to Find Work

The number of Bangladeshi migrants on smugglers’ boats bound for Southeast Asian countries has soared in the past two years More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs