News / Africa

    Soaring Oil Prices Could Stun World Economic Growth

    Anti-Gaddafi rebels sit on the ground near an oil facility in Ras Lanuf, March 10, 2011. The rebel leadership said on Thursday that the oil port of Ras Lanuf in eastern Libya is under heavy bombardment.
    Anti-Gaddafi rebels sit on the ground near an oil facility in Ras Lanuf, March 10, 2011. The rebel leadership said on Thursday that the oil port of Ras Lanuf in eastern Libya is under heavy bombardment.

    Multimedia

    Audio
    Joe DeCapua

    The sharp rise in oil prices as a result of political turmoil in North Africa and the Middle East could deal a major blow to global economic growth over the next two years. Developing nations could be hit the hardest.

    The increase comes as countries are still recovering from a global recession.

    Britain’s Overseas Development Institute (ODI) says there could be an overall one percent decline in GDP, or Gross Domestic Product, which is the value of goods and services produced within a country.  Some African countries could see a much bigger decline, possibly three to four percent.

    An overall one percent decline translates into a loss of about $500 billion from the global economy.  The overall sub-Saharan economy could lose $8 billion.

    Dirk Willem te Velde, ODI’s head of program at the economic development group, says, “The oil price at the moment is about 40 percent higher than it was on average last year.  So an increase in the price of oil by 40 percent will have quite some implications for the world economy and also developing countries and in particular oil importing countries.”

    Some benefit, but many don’t

    “An oil price increase,” he says, “may bring some benefits for oil exporters because they get increased revenues, although they need to spend it well.  But of course there are still a lot of oil importers and particularly poorer countries.  Poorer oil importers are still dependent heavily on fuel in their economies and more so than the richer economies, who have become more energy efficient.”

    ODI research indicates Ghana, Lesotho, Swaziland, Togo, Honduras, Moldova and Nicaragua could lose more than three percent of their GDP to soaring oil prices.

    Willem te Velde says, “The reduction in world GDP is because a higher oil price transfers money from countries with a higher propensity to spend to countries with a lower propensity to spend.”

    He adds, “Because oil exporters, the OPEC countries, tend to spend less of their revenues immediately, that means that there’s less spending going into the world economy.  They’ll save more and that will therefore reduce world GDP.”

    Are the days of cheap oil over?

    “It’s quite difficult to predict exactly what’s going to happen.  Oil prices are notoriously difficult to forecast and I’ve tried to do that in the past and oil prices are extremely volatile.  So, in that sense, it is very difficult to predict.  But there are certain trends that tell us oil prices are likely to stay quite high, particularly in the near future, of course, due to recent conflict and turmoil in the Middle East, but also over the longer term because of the rise in the emerging powers and their demand for oil,” he says.

    It’s unclear at this time just how high they may go.

    ODI recommendations

    There are some things developing countries can do to deal with the economic shocks.

    "[The] first one is that countries could become more resilient to shock, so that whenever a shock hits their countries they should be able to react quickly and should be able to change their production structures quickly.  But a second is one that is important at the moment with high oil prices, and it’s also important when we think about climate change… is that those oil importers that suffer most from high oil prices could become less oil dependent,” he says.

    Dirk Willem te Velde recommends those countries invest in more energy efficient production methods or use renewable sources of energy, such as wind, solar and tidal wave power.  Tidal power is a form of hydropower based on the tides caused by the gravitational pull of the sun and moon.  Advances in turbine technology could make it more feasible.

    You May Like

    Chechen Suspected in Istanbul Attack, but Questions Remain

    Turkish sources say North Caucasus militants involved in bombing at Ataturk airport, but name of at least one alleged attacker raises doubts

    With Johnson Out, Can a New ‘Margaret Thatcher’ Save Britain?

    Contest to replace David Cameron as Britain’s prime minister started in earnest Thursday with top candidates outlining strategy to deal with Brexit fallout

    US Finds Progress Slow Against Human Trafficking in Africa

    Africa continues to be a major source and destination for human trafficking of all kinds -- from forced labor to sexual slavery, says State Department report

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    By the Numbers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Clinton Leads Trump, But Many Voters Don't Like Eitheri
    X
    Jim Malone
    June 29, 2016 6:16 PM
    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video Clinton Leads Trump, But Many Voters Don't Like Either

    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video Slow Rebuilding Amid Boko Haram Destruction in Nigeria’s Northeast

    Military operations have chased Boko Haram out of towns and cities in Nigeria’s northeast since early last year. But it is only recently that people have begun returning to their homes in Adamawa state, near the border with Cameroon, to try to rebuild their lives. For VOA, Chris Stein traveled to the area and has this report.
    Video

    Video New US Ambassador to Somalia Faces Heavy Challenges

    The new U.S. envoy to Somalia, who was sworn into office Monday, will be the first American ambassador to that nation in 25 years. He will take up his post as Somalia faces a number of crucial issues, including insecurity, an upcoming election, and the potential closure of the Dadaab refugee camp in Kenya. VOA’s Jill Craig asked Somalis living in Kenya’s capital city Nairobi how they feel about the U.S. finally installing a new ambassador.
    Video

    Video At National Zoo, Captivating Animal Sculptures Illustrate Tragedy of Ocean Pollution

    The National Zoo in Washington, D.C., is home to about 1,800 animals, representing 300 species. But throughout the summer, visitors can also see other kinds of creatures there. They are larger-than-life animal sculptures that speak volumes about a global issue — the massive plastic pollution in our oceans. VOA's June Soh takes us to the zoo's special exhibit, called Washed Ashore: Art to Save the Sea.
    Video

    Video Baghdad Bikers Defy War with a Roar

    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Melting Pot of Immigrants Working to Restore US Capitol Dome

    The American Iron Works company is one of the firms working to renovate the iconic U.S. Capitol Dome. The company employs immigrants of many different cultural and national backgrounds. VOA’s Arman Tarjimanyan has more.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.

    Special Report

    Adrift The Invisible African Diaspora