Oil price risk and economic growth in ASEAN-6 countries

Abstract

This study aims to assess the impact of oil prices and the Industrial Production Index (IPI) on economic growth in the ASEAN–6 countries (Vietnam, Thailand, Singapore, the Philippines, Malaysia, and Indonesia), using monthly time-series data spanning 22 years (2002–2023). The authors employ the Time–Varying Granger Causality method developed by Shi et al. (2018) to analyze in-depth the effects of oil prices and IPI on Gross Domestic Product (GDP) during key economic periods, including the global financial crisis (2008), the oil price shock (2014–2016), the COVID–19 pandemic (2020–2021), and the Russia – Ukraine war (2022). The results of the analysis indicate a significant impact of oil prices and IPI on economic growth in the ASEAN–6 region at different time intervals. Therefore, the study suggests that the economic growth of the countries under study is highly sensitive to fluctuations in oil prices. Based on the findings, several policy implications are proposed to maintain stability and promote economic growth amid growing economic uncertainties.