World Energy Outlook 2007

equilibrium for international trade in energy and non-energy goods and
services, energy and other commodity prices and GDP in the rest of the world
by major region. The principal channels through which energy markets are
affected by faster Chinese and Indian growth are as follows:
Higher GDP growth in China and India leads to both increased exports and
imports of goods and services, and boosts net imports of energy and other
commodities, pushing up international prices.
Other countries benefit from stronger demand from China and India for
their exports of goods and services, including commodities. Oil-exporting
countries receive a particularly strong boost to both the volume and value of
their exports. Exporters of high-tech manufactured goods and services also
benefit from stronger Chinese and Indian demand.
Increased exports of manufactured goods and services from China and India
offset at least part of the economic stimulus in the rest of the world. Those
countries with a pattern of exports similar to that of China and India are
most affected by increased Chinese and Indian competition.
Higher commodity prices, including energy prices, damage the terms of
trade and income in net importing countries, offsetting part or all of any
boost to income provided by stronger demand from China and India.
In all countries, higher energy prices push down demand – especially in the
long term – offsetting part or all of any stimulus to demand provided by the
higher economic growth that results from increased trade with China and
India.
The net impact on national income and output, and on energy demand and
trade, varies by region according to the structure of the economy, the degree of
dependence on energy imports and the potential for raising energy production
in response to higher international prices. The detailed results can be found in
Chapter 3.
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World Energy Outlook 2007