As worries over the outlook for the global economy resurface, analysts tell CNBC that Asia can take comfort from one fact – the sharp fall in oil prices.
According to Credit Suisse, a sustained 10 percent drop in oil prices would add 10-20 basis points to gross domestic product (GDP) growth in non-Japan Asia and knock 50-90 basis points off headline inflation.
Oil prices have fallen almost 7 percent in the last five days on expectations of sluggish demand from the U.S. and China, the world's two biggest economies. The price of Brent crude oil has tumbled 18 percent from a peak of $118 a barrel in February to below $98 this week. 100647743
Weaker-than-expected economic data from the U.S. and China over the past week have heightened concerns that the global economic outlook is not as strong as many expected just a couple of months ago. But the fall in oil prices provides a silver lining, say analysts.
Mizuho Corporate Bank's market economist Vishnu Varathan says there are three reasons why the oil price slide is positive for Asian economies.
"Most Asian countries are oil importers, so lower oil prices translate into more positive economic dynamics in terms of consumer and investor sentiment because it will lower inflation," he said. "It's also good for manufacturers because Asia by-and-large is a net exporter of goods to the rest of the world so there are less cost pressures."
(Read More: Oil Slide Could Continue as Demand Picture Weakens)
"The bigger picture good news is that lower oil prices shift some of the resources from oil producers to consumers, aiding the global demand recovery," he added.
He said one caveat is that for net oil exporters in Asia such as Malaysia, government coffers could suffer from the fall in oil prices.
Lower Oil Equals Lower Inflation
Analysts pointed to the positive impact lower oil prices would have on Asia's inflation outlook.
"Given the importance of the global oil price in driving inflation in Asia, this development will reduce upward price pressure," Credit Suisse said in a research note published late Wednesday. "China, Thailand and Singapore are likely to be the biggest beneficiaries in terms of lower headline inflation."
Price pressures in countries such as China and India have been seen as an obstacle to further monetary easing, although latest data suggest inflation has started to ease.
In China, annual consumer inflation eased to 2.1 percent in March from 3.2 percent in February, while data this week showed India's key inflation gauge eased to below 6 percent in March for the first time since 2009.
(Read More: Is India's Inflation Headache Finally Over)
"There's been good news for the Indian economy in recent weeks, that gold prices, crude oil prices have come off," Patrick Bennett, currency strategist at CIBC in Hong Kong told CNBC's "Asia Squawk Box" on Thursday. "This will have a positive impact on the trade and current account deficit and the RBI [Reserve Bank of India] will be able to cut interest rates again early next month."
Credit Suisse adds that because India, as well as Indonesia, subsidizes fuel heavily the fall in oil prices is good news for the public finances in those countries.
(Read More: How Gold's Fall Will Affect World's Biggest Consumer)
It says the lower inflation pressure from lower oil prices supports its view that central banks in India, South Korea and Taiwan will lower interest rates in the months ahead.
The Bank of Korea took markets by surprise last week by leaving its benchmark rate unchanged at 2.75 percent in the face of government pressure to give the economy a boost via a rate cut. It has kept monetary policy steady for the past six months.
-By CNBC Asia's Dhara Ranasinghe; Follow her on Twitter: @DharaCNBC
