• Home
  • Business
  • Global: Fitch warns of 2024 oil growth impact and inflation
Image

Global: Fitch warns of 2024 oil growth impact and inflation

Fitch Ratings is warning of potential economic growth reduction and increased inflation due to higher-than-expected oil prices amid potential disruptions in the Middle East conflict.

Global GDP growth is anticipated to decrease by 0.4 percentage points, with a milder 0.1 percentage point decline in 2025. The absence of a substantial rebound implies a potential sustained moderate impact beyond the initial shock.

Fitch’s Global Economic Outlook (GEO) for September 2023 is based on an assumption of $75 per barrel for average oil prices in 2024 and $70 per barrel in 2025.

“Using simulations from the Oxford Economics Global Economic Model, we estimated the impact of higher oil prices throughout 2024-2025 on our baseline GEO growth and inflation forecasts. Our scenario assumes that, due to supply restrictions, oil prices average $120/bbl in 2024 and $100/bbl in 2025.

Fitch highlighted that elevated oil prices would temper GDP growth across nearly all ‘Fitch 20’ economies in the Global Economic Outlook (GEO). However, the impact is expected to diminish significantly by 2025.

“The negative growth impact in 2024 relative to our September GEO forecasts ranges from 0.1 percentage points in Indonesia to 0.9 percentage points in Korea. The US, the eurozone and Japan see impacts of 0.5 percentage points.

South Africa and Turkey would experience the most substantial impacts among major emerging market countries, with a reduction of 0.7 percentage points. Conversely, Russia, and to a lesser extent Brazil, would see a positive impact attributed to the significant role of oil production in their economies.

Using the aggregate impact on the Fitch 20, the global GDP growth shortfall would be 0.4 percentage points in 2024 and 0.1 percentage points in 2025.

It concluded that elevated oil prices are expected to result in higher-than-anticipated inflation rates in 2024, followed by adjustments in 2025.

Related Posts

Ghana: Propak propelling growth of Ghana’s manufacturing industry for exports

Organizers of Propak Ghana have re-iterated the organization’s commitment to increased output in made-in-Ghana products to boost the…

Algeria to host 2025 intra-African Trade Fair

Algeria has signed a hosting agreement for the 2025 intra-African Trade Fair (IATF2025) slated for 4th to 10th…

African Development Bank Group President Dr Adesina visits Brazil’s President Lula to Foster Investment and Economic Cooperation

African Development Bank Group president, Dr Akinwumi Adesina is travelling to Brazil for a two-day official visit to…

Ghana: ICF to enhance corporate ROI and personal development

The ICF Ghana Chapter, representing the International Coaching Federation (ICF), the world’s largest professional coaching organization, has hosted…