Morgan Stanley: If oil prices rise to $120, it will pose a serious threat to Asian economies

On March 23, analysts at Morgan Stanley pointed out in a research note that if oil prices rise to US$120 a barrel, it may pose a major threat to Asia's economic growth. These analysts believe that a continued rise in oil prices by US$10 per barrel is likely to have a direct negative impact on Asia's GDP growth of 20 to 30 basis points. They point out that if oil prices rise to $120 a barrel, Asia's oil and gas spending will account for 6.3% of GDP. If the conflict continues and commodity prices remain high, the strength of policy buffers will also be weakened. If conflicts persist, central banks in the Philippines, Indonesia, India and South Korea may have to raise interest rates starting at the end of the third or fourth quarter.