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Expansion for energy-hungry Asia-Pacific robust, but uncertain

Moody's Investors Service reports some of the gains for the regional economies might be unsustainable.

By Daniel J. Graeber
Expansion for energy-hungry Asia-Pacific robust, but uncertain
Moody's Investors Service reports economic potential in the Asia-Pacific is robust, but it may also be unsustainable. File photo by /Stephen Shaver/UPI. | License Photo

Sept. 18 (UPI) -- The demand prospects for some of the energy-hungry economies in the Asia-Pacific are robust, but there are uncertainties about sustainability, Moody's said.

Economies in the Asia-Pacific region are expanding faster than developed nations and taking on more oil and gas resources as a result. Island nations like Japan, meanwhile, have few resources of their own and rely on imports from major producers like Russia.

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Many of the regional economies rely on foreign trade and, with global demand expectations moving higher in general, a report Monday from Moody's Investors Service said there was optimistic about the potential for a number of Asia-Pacific economies.

"If solid external demand and robust domestic conditions combined to sustain business investment, that would further boost the medium-term growth outlook for the economies in question," it said in its assessment.

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Thailand registered its fastest second-quarter growth in more than four years with 3.7 percent year-on-year, an improvement over first quarter GDP growth at 3.3 percent. Japan's economy, meanwhile, is recovering from recession slower than anticipated with GDP growth during the second quarter at 2.6 percent improving from the 1.2 percent the previous year, but still below initial growth estimates of 4 percent sequentially.

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Regionally, Moody's said faster export growth potential from the Asia-Pacific economies feeding the world's appetite for goods has yet to translate into sustainable and broad-based economic acceleration.

For exporters, this matters for major oil and gas producers. Russian energy company Gazprom has said the region was a cornerstone of its strategy. With new policies that allow for crude oil exports, U.S. oil in the Aisa-Pacific is displacing some other types because it's less expensive. U.S. President Donald Trump, however, has embraced protectionist trade policies that could impede regional trade opportunities because China is pushing for a comprehensive trade agreement in the Asia-Pacific.

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Brent, the global benchmark for crude oil, held a $5.75 per barrel premium early Monday over West Texas Intermediate, the U.S. benchmark.

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