Malaysia & China Economically ‘’Most Resilient’’ In Global Energy Crisis, Says JP Morgan

Malaysia and China has some buffer to withstand the global energy shock.

Credit: Malay Mail

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Malaysia and China stand among Asia’s most resilient economies in the event of a global energy shock, according to JP Morgan.

Rajiv Batra, JP Morgan’s head of Asia and co-head of global emerging markets equity strategy, noted that outside China and Malaysia, the rest of Asia remained broadly vulnerable to an energy shock.

Malaysia is relatively stable because the country has some buffer from net energy exports, and its fiscal deficit from the starting point was ‘’very much under control due to government policy.’’ Inflation was not significantly high enough either.

Speaking to CNBC last week, Batra added that these buffers would help protect both their stock markets and currencies.

As for China, Batra said only 5% of its electricity production is dependent on imported energy. The majority are dependent on their domestic productions.

China has a strategic buffer, nearly 1.7 billion barrels of capacity available, as well as other alternatives like renewables. Batra added China can go back to coal big time as well.

Everyone is not in the clear yet. Ultimately, the question is whether countries are willing to sacrifice growth or fiscal policy if the energy crisis is prolonged.

In other words, it comes down to how much economic pain countries are willing to absorb if the energy crisis lasts longer than expected.