Singapore - The link between income and trade is stronger between Asia and the West than between North America and Europe, according to a study by the Economist Intelligence Unit which was released in Singapore Wednesday.

A 1 per cent increase in combined income between an Asian country and a Western country would deliver a 1.36 per cent increase in trade, said the study, which the research company did for international couriers DHL.

Trade between the Association of Southeast Asian Nations (ASEAN) and the West would rise 1.35 per cent for every one per cent increase in combined income, compared to trading relations between two Western countries, where a 1 per cent increase in combined income delivers a 1.14 per cent increase in trade.

Another key finding, based on 383 bilateral trade relationships reviewed in the study, showed that a 1 per cent increase in oil price leads to a 0.24 per cent reduction in trade.

High oil prices have the greatest effect in Southeast Asia, where trade decreases the most.

The impact on oil prices is much greater when an ASEAN country trades with a nation in the European Union or the North America Free Trade Area, with a one per cent increase in the price of oil reducing the value of trade by 0.3 per cent.

"Much of Asia has grown up on the back of vibrant trade with the West. But with the economies of North America and Europe forecast to perform poorly in 2009, the impact on Asia's trade dependent economies could be serious indeed," said EIU director Justin Wood.

The study urged Asian governments to rebalance their economies against the impact of slowing global growth on Asian trade. (dpa)