Mukesh the Delhi auto-rickshaw driver scrapes by as it is.
Karina's family of fish sellers in Jakarta is paying a budget-
straining 12 cents a gallon for gas.
And now, an oil price rise.
Developing nations, particularly in Asia, take the brunt of oil
price shocks. The latest rise isn't likely to completely undo the
Asian economic recovery. But it has left many governments - and
consumers - scrambling to adjust to the new reality.
India, for example, imports 70 percent of its oil, and heavily
subsidizes the local pump. Each dollar rise in a barrel of crude
costs the Indian government $400 million in hard currency. Those
costs are projected to rise from about $10 billion to as high as
$21 billion this year - a figure Indian analysts say matches
spending on education and defense.
As a result, last week Indian officials announced a 10 percent
cutback on new government jobs, and a year moratorium on filling
vacant jobs - though it also delayed passing along higher prices to
consumers, because of concerns about the possibility of strikes
similar to those that European truckers mounted this summer.
"For us, this comes like a bolt out of the blue," says C.D. Wadva
of the Center for Policy Research in New Delhi. "We were hoping to
tread the path of incremental growth, and we never planned for any
Even as recovery from Asia's economic meltdown of 1997 is still
taking hold, rising oil prices are acting as a wet blanket of
uncertainty across the region.
Few analysts think oil fluctuations will spark a crisis of the
kind that blindsided the global economy just three years ago. Even
though oil-dependent Asia leads the world in growth of demand, the
region is performing strongly enough so that an oil hike by itself
can't flatten its economies, and some experts warn against fearful
Yet prices that jumped from $13 to more than $30 a barrel, plus
weak currencies, high deficits, and, in recent weeks, large market
swings, are dampening optimism for a sharply higher Asian economic
"We fantasized during the 1990s about a Pacific or Asian
century," says Cha Soiw Yue, an economist at Singapore University.
"But after the crisis ..., we don't speak with that kind of
Last month the IMF's World Economic Outlook warned of a possible
oil-related slowdown in the global economy. Asian states depend
heavily on exports, and lower demand by belt-tightening Americans
for electronics, auto parts, and other manufactured goods that Asia
excels in could constrict growth.
Higher costs for crude threaten to exacerbate weaknesses peculiar
to different Asian tigers - lack of investment in Indonesia due to
instability, Thailand's struggle with a huge overcapacity and bad
loans, and South Korea's 100 percent dependency on imported oil, to
name a few.
Combined, such factors affect investor and local consumer
confidence. In Southeast Asia, for example, direct investment
remains down from a peak of $21 billion in 1997 to $13 billion
today, said a report by the secretary general of the Association of
Southeast Asian Nations (ASEAN), leaked recently to reporters. …