Crunch time

8 July 2015 By Andy Mukherjee

The region already faces slowing inflation, idle factories, and wobbly economies. Falling crude puts further downward pressure on prices but will do little to spur consumption. Policymakers might as well give cash gifts to indebted households, with central banks footing the bill.

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Crude prices closed at a three-month low of $51.98 in U.S. trading on July 7, having fallen about 17 percent from their May high of $62.58, amidst a Greek debt stalemate and plunging Chinese stock prices. A drop of 20 percent from the peak will put oil in a so-called “bear market.” Brent crude futures traded at $56.85 on July 7.

Oxford Economics expects real, or inflation-adjusted, wages in 14 Asia-Pacific economies to expand an average 5 percent this year, following 4.7 percent growth last year. Between 1992 and 2012, real wages in the region grew an average 6.6 percent.

The Shanghai Stock Exchange Composite Index fell as much as 8 percent on the morning of July 8. It was down 4.2 percent at 10:16 a.m. (0816 GMT) in Shanghai.

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