The plunge in global oil prices is generally positive from an economic and fiscal perspective for Asian economies that rely on energy imports. Consumers are clearly benefiting, while inflation rates are coming down and interest rates remain low.
"Asia is profiting in several ways from the drop in oil prices. China, India, Japan, South Korea and Singapore belong to the top-10 of global net importers and most other Asian countries are net oil importers as well," said Arjen van Dijkhuizen, a senior economist ABN Amro Bank of the Netherlands.
In addition, the "positive shock" of a 60% fall in oil prices means household incomes will increase, says Thanavath Phonvichai, vice-president for research with the University of the Thai Chamber of Commerce in Bangkok.
On average, Thailand consumes about 22 million litres of petrol including gasohol and about 55 million litres of diesel a month and falling oil prices are estimated to help Thai consumers and businesses save about 10 billion baht a month or 120 billion baht a year.
"Lower oil prices help increase disposable income. This will accordingly boost domestic spending, which will be vital to the country's economic growth this year," said Mr Thanavath.
Christian de Guzman, vice-president and senior analyst with Moody's Investors Service, said inflation would also decelerate and give central banks room to keep interest rates low. "In Thailand, inflation was 0.6% year-on-year in December, falling from 1.5% in October while in the Philippines the rate was 2.7%, dropping from 4.3% over the same time," he said.
In Indonesia, the government has reduced fuel subsidies twice in recent months, which normally would have caused a sharp spike of inflation. While the consumer price index did jump, the plunge in oil prices limited the rise.
"This should help to normalise inflation in Indonesia over the next few months. From 4.8% in October, inflation after the subsidy cut increased to 8.4% in December," said Mr de Guzman.
India imports 75% of its oil, and analysts say falling oil prices will ease its current account deficit. At the same time, the cost of fuel subsidies could fall by $2.5 billion this year if oil prices stay low, the BBC reported.
"Lower cost-push inflation could create more scope for monetary easing, which may also benefit Asian economies," said Mr van Dijkhuizen.
He expects to see more room for further easing in China, India and possibly South Korea, despite the risk of a possible earlier-than-expected rate increase by the US Federal Reserve.
China last year overtook the United States as the world's largest net importer of oil, at an estimated 7.3 million barrels. Other large importers in Asia (based on 2012 figures) include Japan (4.6 million), India (2.5 million), South Korea ( 2.3 million), Singapore (1.2 million), Thailand (784,000) and Indonesia (611,000 barrels).
WHO BENEFITS?
The International Monetary Fund (IMF) estimated last month that the drop in oil prices, if sustained, could add up to 0.7% to global economic output.
In China, consumer spending would be boosted due to lower inflation rates, which has major implications for demand and imports from other countries, said a report by CBRE, the US-based real estate services multinational. The economic slowdown is expected to level out as sentiment in the country rises, it added.
Although China's GDP growth will continue to decline gradually to below 7% in 2015, consumption of crude products is forecast to rise by 3-4%, according to Moody's.
"Slower industrial activity has weakened China's demand for diesel, but demand for gasoline and kerosene will remain strong as automobile ownership and air travel both increase," said Kai Hu, a vice-president and senior credit officer with Moody's.
In Japan, CBRE believes that lower energy prices will help offset the effect of increasing price pressures on consumers following April's consumption tax increase. "They may also help boost economic sentiment, particularly given the weaker prospects for Japan's economic revival."
However, the BBC noted that Japan, which imports nearly all of its oil, would see mixed blessings as high energy prices have been a key part of Prime Minister Shinzo Abe's plan to combat deflation.
In Malaysia, the World Bank projects economic growth of 4.7% this year, compared with the government's prediction of 5-6%, as the government derives 30% of its revenue from petroleum-related earnings. As well, the ringgit has fallen almost 11% against the US dollar over the past six months as oil prices sank.
INDUSTRY IMPACT
For oil exploration and production (E&P) companies and oilfield service providers, the longer the price slump lasts, the more challenges they will face. In the United States, for example, the number of active oil exploration rigs fell to 1,482 in early January from a record of 1,609 in October.
"We see no near-term catalysts that would change the supply-demand equation," said Terry Marshall, a senior vice-president of Moody's. "If prices remain at around $55 a barrel through 2015, most of the lost revenue will hit E&P companies' bottom line, reducing their cash flow available for reinvestment."
Pete Speer, another Moody's senior vice-president, added that the steep reduction in E&P capital spending would reduce earnings for oilfield service providers and land drilling companies as activity drops off and E&P customers negotiate lower prices.
In the real estate sector, capital expenditures (capex) will be reduced as the oil, refining and shipping industries are negatively affected by low prices, according to the CBRE report.
"Overall we have not seen much of an immediate impact on Asia Pacific real estate markets. However, if retail sales grow as predicted, it may support retail rental growth in key [Asia Pacific] consumer markets such as Japan, Hong Kong and China," it noted.
Among the top winners will be the aviation and automotive sectors, while shipping and energy-intensive heavy manufacturing industries such as steel will benefit across the region.
A motorcyclist stops to buy fuel in bottles at a village on the outskirts of Kuala Lumpur.
OPEC VS SHALE GAS
The current price plunge has its roots in the boom in shale gas production in the United States, where new "fracking" technology has made exploration economical for the first time. This has led to an increase in global supplies have outgrown global demand by close to 2.2% at present.
US oil production increased by 48% between 2008 and 2013, taking output to 11 million barrels per day by early 2014, but now the United States risks becoming a "victim of its own success", said a recent report in The Guardian.
Hans van Cleef, senior energy economist at ABN Amro, said given prevailing lower prices and reduced capex, project delays and a drop in the US rig count, now is the time for E&P companies to become more innovative and efficient.
"Lower oil prices give a boost to innovation as oil producers need to either lower their costs or increase production," he said. "Recent signals suggest that production efficiency has increased and costs have actually declined."
Many analysts say what is really taking place is a waiting game that pits Opec, with its ultra-low production costs in key members such as Saudi Arabia, against the US shale industry. Someone will have to blink first.
"[Opec] is playing this game to see how long it's going to last. They want to punish some of the fracking that's going on," former Wells Fargo chairman and CEO Richard Kovacevich said in a recent interview with CNBC.
"Opec appears to be playing a waiting game against oil price hedges by the US shale industry, even as some producers take profits from existing hedges and plant new ones, effectively extending the date at which they will feel the real impact of price declines."
However, Mr van Cleef doesn't see the plunge in oil prices as an attempt by Opec to cut off US oil production. "It could be a strategy to wait until non-Opec producers realise that they will need to act as well if oil prices stay too low for too long," he said.
Mr van Cleef noted that the price has dropped "too far, too fast", and it should recover over the course of 2015. "To change this negative sentiment, something should happen on the supply side such as the shift to expectation of less, or no oversupply, or the effects of a low oil price should give a strong boost to oil demand as a result of increased economic growth," he said.
Moody's still maintains a forecast for Brent prices to recover to $80 this year and $85 in 2016 if demand increases and low prices create a "proper supply response".