World Oil Outlook - Opec

However, the UN publishes not only mean assessments for future population
growth, which were used for the Reference Case, but also low and high variants.
These show that by 2035, global population could be as low as 8 billion or as high
as 9.2 billion, compared to the mean level of 8.6 billion. Thus, in terms of economic
growth rates, the high and low variants see an uncertainty of +/-0.3% p.a., relative
to the Reference Case. This feeds directly into economic growth uncertainty in the
long-term.
Of course, uncertainty over the future for global economic growth relates to
issues that go beyond population growth rates. Long-term growth potential from
factor productivity increases are typically the focus for economic growth scenarios.
Thus attention must be paid to possible alternative trade patterns, investment, consumption,
savings rates, 27 sectoral shifts in economies, economic reforms that affect
the investment climate, income distribution, dependency ratios, technological
development and diffusion, government expenditure, levels of education, political
stability, (target) levels of inflation, exchange rate movements, monetary and fiscal
policies, interest rates, commodity prices, constraints from debt circumstances and
credit availability. Downside risks to growth are often stressed, rather than the upside
potential. 28
The immediate outlook is dominated by the aftermath of the financial crisis
and the on-going struggles related the global economic recovery. The main focus is
currently on the Euro-zone debt crisis. The uncertainty over the future of the Euro,
especially given the political turnaround in some countries regarding the acceptability
of austerity measures, is one of the factors that play into the assessment. While
debt levels and budget deficits are generally falling, 29 growth expectations are being
repeatedly revised downwards and doubts remain as to the ability of the region to
manage its sovereign debt. The severe austerity measures put in place have also adversely
impacted growth prospects, with the risk of entering into a vicious circle and
snowballing effect. It should also be noted that the debt crisis in the Euro-zone has
negative implications for growth prospects elsewhere, in particular through strong
trade interlinkages.
In developing the LEG scenario, the short- to medium-term prospects of a persistent
dampening of growth from the Euro-zone debt crisis is combined with longer
term downside factors. The assumptions for global economic growth are such that,
on average, the world economy grows at a 0.5% p.a. lower rate than in the Reference
Case. However, the lower rates are skewed to the short- and medium-term, when the
largest downside risk is reflected in the OECD Europe region, which grows at an
average of just 0.7% p.a. for the rest of this decade. Lower growth in this scenario is
nevertheless experienced in all regions.
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