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SINGAPORE : A study has found that high oil prices are impacting Southeast Asia's trade exports more than any other region in Asia.
And if oil prices double, as it did this year, the value of trade between ASEAN countries and the West - Europe and the United States - could drop by 30 per cent over the next five years.
High oil prices are driving down the value of Asian exports.
Industry observers said high oil prices have the greatest effect on Southeast Asia because of the higher proportion of low-value goods exported from the region.
They added that transportation costs make up a greater share of the final cost of low-value goods than they do for high-value goods.
The study by the Economist Intelligence Unit said the global slowdown will also have a serious impact on Asia's trade-dependent economies.
That is why despite the recent drop in oil prices, Asian economies are now facing challenges of slowing demand from Europe and the United States.
Justin Wood, director, Southeast Asia, Economist Intelligence Unit, said: "When you have these economies contracting, and these economies being the final markets where the consumers buy a lot of the goods that are manufactured in this part of the world, clearly that is going to be negative for trade.
"So, the miserable economic outlook and the falling income levels in the West are going to have a very negative impact on trade growth next year."
The study shows trade between Asia and the West is expected to shrink by about 4 per cent next year, compared to the 13 per cent growth in 2007.
Any recovery in trade growth will only come in 2010.
Going forward, market watchers expect the region's trade growth to come from within Asia.
And that is why the parent company of global logistics player DHL is upbeat about its Asian operations.
Frank Appel, CEO, Deutsche Post World Net, said: "We expect short-term slowdown in growth but mid-term, we will see huge opportunities and we will keep our pace to invest constantly into Asia.
"In the last couple of years, (we invested) more than US$2 billion and I have no doubt that we will see similar numbers in the coming years."
The report studied trade flows between 39 countries in Asia, Europe and North America. - CNA/ms
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