Oil will not derail World economy-World Bank

In an interview with Reuters, World Bank Global Economics Manager Andrew Burns said, “A sustained period of higher oil prices would significantly affect developing economies but is unlikely to derail their strong recovery since the financial crisis….Burns said a surge in the oil price could dent economic growth in developing countries by somewhere between 0.2 and 0.4 percentage points if it remained high for a year or longer….

The World Bank is closely monitoring the spike in oil prices because more expensive fuel, alongside current high food prices, would push more people into extreme poverty…. Burn said poorer countries running large current account deficits will be hardest hit by a rise in fuel prices because they were unable to absorb the increased costs and would have to cut spending elsewhere to make up for the losses….

He said inflation in the majority of developing countries remained ‘relatively low or even very low.’ He noted, however, that inflation was rising in the BRIC nations of Brazil, Russia, India and China that are dealing with a surge in private investment capital….”





[Reuters/Factiva]