Even developed, energy-efficient economies like Japan and South Korea are feeling oil's bite. Growth in Korea is likely to be at least 20 below what the Ministry of Finance and Economy was targeting at the beginning of the year, economists estimate. In Japan, 60 oil for 12 months could shave half a percent off GDP growth in an economy that had recently begun to perk up, according to Reiji Takeishi, a senior fellow at the Fujitsu Research Institute in Tokyo. The oil-price hikes so far, estimates Morgan Stanley economist Andy Xie, mean the Asia-Pacific region is spending 1.2 more of its total GDP on oil imports than it did last year. There's no question that oil is the strongest headwind for growth now, ... This is a very delicate moment, no doubt about it.
I experienced the effect firsthand on my return flight from London to Hong Kong last weekend. There were three passengers in my cabin - a 10 percent occupancy rate at best. Hong Kong's restaurants are mostly empty. It is difficult to enjoy a meal with masked waiters tiptoeing around in silence. If you want to frighten people in Hong Kong, just sneeze.