Speaking to reporters in Singapore by videoconference, IMF Managing Director Rodrigo de Rato said it is unlikely oil prices will recede in the medium term, not even to 2004 levels. But he said economic growth is likely to be strong in Asia, led by China and India and a recovering Japan.
"The growth in Asia in 2004 was very good [at] 6.75% and we see the continuation of a similar track in [2005 and 2006]," he said. The impact of oil prices is so far modest, but "we believe if high oil prices will continue Asian growth will be affected"...
Economists agree with the IMF assumption that Asia may weather the impact of high oil prices, unless they rise to much higher levels, as strong growth in the U.S. continues to fuel export growth in Asia.
"Growth isn't significantly affected this year because the U.S. economy has emerged from its soft patch and the modest pickup in the technology sector is supporting Asian economies," said Joseph Tan, an economist at Standard Chartered Bank.
But he said growth in Asia will slow slightly in 2006 because of high oil prices. Among the most vulnerable will be Indonesia, Thailand and to some extent South Korea.
And here be some sentiment that, yes, monetary policy can indeed ease the pain:
Sanjay Mahtur, a regional economist at UBS Bank, agrees the slowdown won't be drastic. The impact of high prices has been diluted because, unlike previous cycles, the monetary-policy environment in most economies isn't that tight, he said.
I still contend you shouldn't push that one too far.