MercoPress. South Atlantic News Agency

World energy shortage threatening Asian expansion

Oil's surging price threatens with slowing Asia's economic expansion, whose strong demand for crude is precisely one of the main reasons for the ballooning of crude, said International Monetary Fund Managing Director Rodrigo Rato.

"Growth in Asia is really impressive. But there are risks and the main risk at this moment for Asia is the price of oil which this week reached a new record", said Mr. Rato during a video conference from Washington with Asian journalists.

"So far the impact of oil prices has been moderate, but we believe that if high prices persist and we believe this is the case, growth in Asia could be threatened", he added.

Mr. Rato admitted as most economists now accept that oil prices will remain high and the current surge is different to similar situations in the past.

"We know the price of oil won't drop and won't reach the level of two years ago. Certainly not in the short term", emphasized Mr. Rato.

Some countries in Asia such as Indonesia and Philippines already have began to suffer the effects of the high oil prices and authorities are currently involved in concentrating efforts to contain inflation indicated Mr. Rato who called on Jakarta and Manila to "double efforts".

IMF Managing Director also cautioned about "subsidizing" fuel prices, which are "very popular policies" but have long term negative effects for the economy and the overall community.

The strong demand from the US economy, --the world's top consumer--, plus the expansion of the Chinese and Indian economies are the main factors behind the surge in oil prices argued the IMF chief.

"Differently to other situations which were linked to a reduction in supply, the main reasons behind the high oil prices are in the sustained strength of demand", which has been aggravated by supply and refining problems, plus lack of transparency in oil markets, concluded Mr. Rato.