Weak private consumption has encouraged Asian governments to subsidise rising oil prices, writes Bloomberg columnist Andy Mukherjee. In Asia Slipping on Oil he warns that "faulty energy pricing" is widespread:
In the name of protecting the poor, governments in China, India, Indonesia, Malaysia, Thailand and Sri Lanka have either subsidized fuel prices from their own budgets, or what's worse, ordained that they be kept low by twisting retailers' arms. The result: one half of the world is distorting prices for the other half and pushing the global economy toward recession.
Mukherjee argues that Asian governments should "do the right thing: pass on increases in fuel costs to final consumers and raise interest rates". But somehow I doubt they will. (Hat tip: Edward Hugh).
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