Tax & Spend
$100 Oil Shock Set to Strain Asia’s Cash-Strapped Governments
Malaysia said it would try to hold the subsidized price of the country’s most popular fuel for the next two months even as oil prices surge.
Photographer: Samsul Said/BloombergAsia’s governments will have to stretch their budgets or risk unleashing an inflation shock as the deepening conflict in the Middle East pushes oil prices past $100 a barrel.
That could raise new credit risks for emerging markets, warned Fitch Ratings, as higher oil prices bloat subsidy and import bills and disrupt remittances, tourism and investment flows. It tagged India and the Philippines as among the most at risk, with net fossil fuel imports exceeding 3% of their gross domestic product.