Plummeting oil prices, which on Monday saw Brent crude tumbling to its lowest level in four years, may be bad for producers but should come as a welcome relief for Asia economies, boosting economic activity and reducing inflationary pressures, economists say.

"This is a tax cut for most of Asia [as] this is an energy short region," Paul Gruenwald, chief economist, Asia Pacific at Standard and Poor's (S&P) Ratings Services

"A couple of producers in the region - Malaysia and Australia - may take a minor hit but for the rest of the region, this is a gift," he said.

The majority of countries in Asia are energy importers, with net import bills ranging under 2 percent of gross domestic product (GDP) for Vietnam to more than 10 percent for Thailand, according to Fitch Ratings.

Since oil is a large share of the consumer's basket, a decline in prices is akin to a tax break and will likely boost spending in other goods and services. Furthermore, cheaper oil reduces the cost of inputs of energy-intensive production, thereby supporting economic activity.

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Falling oil prices also depress consumer price inflation through its sizable share of the CPI basket.

"Disinflation as a result of lower oil prices could also contribute to GDP (gross domestic product) growth less directly in some countries, by facilitating a more accommodative monetary policy than would otherwise be followed," said Andrew Colquhoun, senior director, sovereigns at Fitch Ratings.

Oil has taken a beating following OPEC's decision last Thursday not to cut oil output to support prices, with Brent crude in free fall, tumbling to $68.15 a barrel on Monday.

Brent has fallen more than 40 percent since June, as rising shale production in North America created an oil glut amid mediocre global growth environment.

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Window for policy action

In addition to helping the region's growth-inflation dynamics, lower oil prices could also have a positive impact on fiscal accounts,opening golden opportunities for governments to abolish burdensome subsidies as there will be little opposition to such action given its subdued impact on inflation.

"The extent to which [governments] are able to realize the potential fiscal benefits will be determined at least partly by how policy makers respond - whether they use budget windfalls to increase spending or reduce deficits," said Colquhoun.

Both the Indian and Indonesian governments have already taken advantage of the price decline.