World Energy Outlook 2006

Table 11.5: IMF Analysis of the Macroeconomic Impact of an Increase
in the International Crude Oil Price to $80 per Barrel*
(Percentage point deviation from baseline in the first year)
Base case Higher
persistence
Real GDP case – real GDP
growth CPI inflation growth
Industrialised countries –0.6 1.0 –1.0
United States –0.8 1.3 –
Euro area –0.6 0.9 –
Japan –0.7 0.9 –
United Kingdom
Developing and emerging
–0.4 0.9 –
market oil importers –0.8 – –1.3
Africa –0.9 – –1.4
Central and eastern Europe –0.8 – –1.2
CIS and Mongolia –1.0 – –1.7
Developing Asia –0.8 – –1.3
Newly industrialised Asia –0.8 – –1.4
Western hemisphere –0.7 – –1.2
Heavily indebted poor countries –1.7 – –2.7
* From a starting price of $43/barrel.
Source: IMF (2005).
variables is typically longer in this analysis. World real GDP falls by about
0.9% relative to the base case on average in the first four years of higher
prices (Table 11.6). Most of the impact occurs within the first three years;
thereafter, GDP growth returns roughly to the same path as in the baseline.
In general, the overall GDP impact in oil-importing developing countries is
significantly greater than that in the industrialised countries. Among the
large developing countries, the impact on GDP is greatest for China, where
it falls by 0.6%. The impact of higher prices on inflation is generally more
marked. Most industrialised countries see their consumer price inflation rates
rise by between 0.2 and 1.1 percentage points. Inflation rises more in the
developing countries, partly because taxes on energy are lower. It is 0.9
percentage points higher in China and 1.5 points higher in India than in the
base case. The unemployment rate is also slightly higher in most oilimporting
countries.
304 World Energy Outlook 2006 - FOCUS ON KEY TOPICS
© OECD/IEA, 2007