SE Asia Enjoying Cheaper Oil

Cheaper oil is boosting trade surpluses in some of Southeast Asia’s biggest economies, giving policy makers more ammunition to guard against capital outflows should the Federal Reserve raise interest rates later this year.

Indonesia’s trade surplus rose to a nine-month high in December, while the Philippines had its highest in five months in November. The current-account surpluses of the Philippines and Singapore will probably rise to a record this year, while Indonesia’s deficit will be the smallest since a surplus in 2011, according to estimates by HSBC Holdings Plc and the World Bank.

“Definitely, oil is boosting trade and current-account surpluses and that reduces vulnerability to external uncertainties,” said Euben Paracuelles, a Singapore-based economist at Nomura Holdings Inc. “Once the Fed raises interest rates, there will be some pressure on capital outflows. Central banks in the region could look into accumulating more reserves as a buffer.”

Bloomberg

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