Daily Management Review

Big Commodity Importing Countries To See Fall In Growth Due To War-Induced Hike In Oil Price, Says World Bank


Big Commodity Importing Countries To See Fall In Growth Due To War-Induced Hike In Oil Price, Says World Bank
Those developing economies that are large net importers of oil such as China, Indonesia, South Africa, and Turkey will face a potential loss of 1 per cent in their gross domestic product for the current year because of continued high prices of oil driven by the Russian invasion of Ukraine, warned the World Bank.
The Ukraine war will tender further blows to the growth for emerging economies that are already unable to register a stable recovery from the Covid-19 pandemic hit as well as trying to navigate a range of other economic headwinds - from high debt volumes to inflation, wrote Indermit Gill, the World Bank’s Vice President for Equitable Growth, Finance, and Institutions, in a blog posting recently.
"The war has aggravated those uncertainties in ways that will reverberate across the world, harming the most vulnerable people in the most fragile places," Gill said.  "It's too soon to tell the degree to which the conflict will alter the global economic outlook," Gill added.
Both Russia and Ukraine together account for more than 20 per cent of the total exports of wheat globally and a host of countries in the Middle East, Central Asia, Africa, and Europe are significantly dependent on these two warring countries for the staple food that they eat.
According to an estimate from a report soon to be published by the World Bank, if there is a 10 per cent hike in oil prices persistent over a number of years would be enough to bring down growth for those developing countries that are heavy importers of commodities by about one-tenth of a percentage point, said Gill.
Since the past six months, global crude prices have more than doubled.
"If this lasts, oil could shave a full percentage point of growth from oil importers like China, Indonesia, South Africa, and Turkey," Gill said. "Before the war broke out, South Africa was expected to grow by about 2% annually in 2022 and 2023, Turkey by 2-3%, and China and Indonesia by 5%," he added.
Russia has officially denied its military operations in Ukraine as an invasion and instead calls them a "special operation". It has faced severe sanctions from Western countries – including the United States and major European countries.