High oil prices add uncertainty to future world economy
Updated: 2008-01-04 22:47
BEIJING -- Oil prices hit a record high of US$100.09 per barrel (dpb) on the New York Mercantile Exchange on Thursday after crossing the threshold of 100 dpb on the previous day, the first trading day of 2008.
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According to the "World Economic Outlook" published in October by the International Monetary Fund (IMF), rich countries will see an economic growth rate of 2.2 percent in 2008, lower than the 2.5 percent in 2007.
The report predicted that the slowdown trend will also be seen in developing countries, which will grow at 7.4 percent, much lower than the 8.1 percent last year.
Given the recent record of oil prices, the world economy may be dragged down further, analysts said.
"Oil prices have been rising fast since the summer," Amelia Torres, a spokeswoman for the EU executive commission, said on Thursday. "If these very high levels are maintained, it will of course have an impact on the economy," she said.
"Staying at the 100-dollar-level will mean inflation and economic hardship," Business Week cited senior energy analyst Fadel Gheit as saying.
"Despite the fact that recent high oil prices are not driven up by supply shortages, the price rise will still produce a broad impact," he added.
Constantly high oil prices will adversely influence the world economy in two ways, analysts said.
On the one hand, if people have to pay more for energy, their individual consumption capacity will be restrained, which will hamper overall economic growth as individual consumption has already become a major economy booster in rich countries.
On the other hand, high oil prices will increase the risk of worldwide inflation, given that oil is now an indispensable raw material used in a wide range of areas.
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