Impact Of High Oil Prices On The Global Economy

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This paper was written 2 years ago at the beginning of the rise of commodity prices, and estimated what would be the impact of a 10$ price increase in the price of oil, from 25 to 35$ per barrel. In May 2004, such increase would cost the OECD 0.4% of GDP, inflation would rise by 0.5% and unemployment would also increase.

The bill for OECD oil imports was 260 billion $ in 2003, and a 10$/40% increase would cost 100 B$, which should not be far from 0.4% of OECD GDP. But developing countries would be much harder hit – poor highly indebted countries in Asia would lose 1.6% of GDP, Sub-Saharan African countries even 3%. An update of this analysis to today’s situation would be interesting. [See comment – Ed]

thewatt