Rating agency, Fitch, is warning that higher-than-expected oil prices in a scenario where the Middle East conflict disrupts oil supply would cause lower economic growth and higher inflation.
World Gross Domestic Product growth would be 0.4 percentage points lower in 2024, but only 0.1 percentage points lower in 2025, although the absence of a significant rebound suggests there could be a persistent moderate impact beyond the initial shock.
Fitch’s September 2023 Global Economic Outlook (GEO) assumes average oil prices of $75 a barrel and $70 per barrel (bbl) in 2024 and 2025, respectively.
“Using simulations from the Oxford Economics Global Economic Model, we estimated the impact of higher oil prices throughout 2024-2025 on our baseline GEO growth and inflation forecasts. Our scenario assumes that, due to supply restrictions, oil prices average $120/bbl in 2024 and $100/bbl in 2025.
It pointed out that higher oil prices would dampen Gross Domestic Product (GDP) growth in almost all the GEO’s ‘Fitch 20’ economies, although the impact would largely dissipate in 2025.
Furthermore, it said the absence of a significant growth rebound in 2025 implies a longer-lasting, if generally moderate, impact on GDP levels in most countries, which could affect assessments of potential growth, it added.
“The negative growth impact in 2024 relative to our September GEO forecasts ranges from 0.1 percentage points in Indonesia to 0.9 percentage points in Korea. The US, the eurozone and Japan see impacts of 0.5 percentage points.
The largest impacts among the main emerging market countries would be in South Africa and Turkey (0.7 percentage points). Russia, and to a much lesser extent Brazil, would see a positive impact due to the important role of oil production in these economies.
Using the aggregate impact on the Fitch 20, the global GDP growth shortfall would be 0.4 percentage points in 2024 and 0.1 percentage points in 2025.
It concluded that higher oil prices would lead to higher-than-expected inflation rates in 2024, followed by corrections in 2025.
NAIMOS has intensified its fight against illegal mining at some parts of the Ahafo Region,… Read More
Former Finance Minister Ken Ofori-Atta is scheduled to appear before a court in the United… Read More
The Deputy Chief Executive Officer of the Gaming Commission of Ghana, Lamtiig Apanga, has advised… Read More
Renowned Ghanaian gospel music pioneer and founder of the Asomafo gospel ensemble, Yaw Sarpong, has… Read More
Former Forestry Commission official Charles Owusu has lauded former President John Mahama for demonstrating humility… Read More
The Minister for Trade, Agribusiness and Industry, Elizabeth Ofosu-Adjare, has attributed the recent decline in… Read More