An energy supply shock will hit most economies in the Asia-Pacific (APAC) region, given their net energy importing status. Economies with high energy import dependence relative to gross domestic product (GDP) face greater vulnerability, it noted.
India’s low strategic stockpiles to its energy needs poses a risk, while Japan’s relatively thin gas reserves could expose weaknesses, particularly for sectors reliant on gas supplies, S&P Global said.
An energy supply shock will hit most APAC economies, given their net energy importing status.
Energy supply gaps are somewhat mitigated as these broadly have some strategic crude oil stockpiles.
Thailand, South Korea, Vietnam, Singapore and India have high energy import needs relative to GDP.
While China’s energy imports are moderate relative to GDP, it is large in absolute terms—making it the region’s largest energy importer, it said..
Energy supply gaps are somewhat mitigated as APAC economies broadly have some strategic crude oil stockpiles to smooth over any short-term disruption in crude supplies.
China, South Korea, Singapore, Taiwan and Japan hold particularly large stockpiles (combination of crude and gas) relative to consumption.
With these stockpiles held across both government and commercial sectors, tapping into such resources may be less forthcoming, S&P Global said.
The fuel crunch may prompt governments to impose more prudent measures around energy consumption. Following that, economies may need to access the energy markets at potentially disruptive pricing, it remarked.
Amid shortages, governments may prioritise the essential needs of citizens over industries. A longer halt in manufacturing could weigh on growth.
Energy price surge could squeeze corporations and households, triggering a global slowdown, it said. For corporations, the pain is two-fold: the dimmer outlook hits revenue growth, while higher inputs hit margins. The ability to pass through cost to consumers will be tested.
Downstream sectors, particularly transportation, logistics, industrial and petrochemicals, and agriculture, will face an outsized squeeze on margins and credit drags, S&P Global added.
Inflation may rise for Asian consumers, who had benefitted from a period of contained energy prices and China’s export of disinflation.
Fibre2Fashion News Desk (DS)
