The recent sharp drop in global oil prices is a positive development for Emerging Asia. It will support growth in most economies and will put downward pressure on inflation, providing scope for monetary policy to be kept looser than would otherwise have been the case. The region’s biggest economy, China, is likely to slow, but this should be compensated for by faster growth elsewhere, with the result that regional growth will be broadly flat in 2015-16. Rate hikes in the US or fears that Greece might leave the euro-zone could trigger another bout of market volatility but, with the exception of Indonesia, Asian economies are well-placed to cope.
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