Rising Oil Prices Skirt Poorer Nations

Contrary to expectations, the sharp increase in world oil prices has not had any devastating consequences on the fragile economies of the world’s developing nations, according to a new U.N. report released here.

“Oil prices are expected to remain high in the near term, and the impact on growth and inflation will vary from country to country,” says the 160-page study on the “World Economic Situation and Prospects 2005″.

..As the new U.N. report also explains, many oil importers are feeling a bit more of a strain as oil prices stay up and the subsidies many governments in developing countries put on domestic energy prices are more difficult to finance, so more of the oil price increase is passed on to consumers and is increasing production costs.

“So, we expect that during 2006 there will be more complaints about high oil prices from groups of countries,” Vos said.

The 160-page annual report points out that there are, however, a number of downside risks to economic growth in 2006. A prolonged high oil price over the next one to two years will have a stronger inflationary impact on most African economies.

Asian Tribune