By Nihan Cabbaroglu
ANKARA
Low oil prices can cause an income shift to importer countries if supported by strong global economic growth, said the World Bank in a report released on Wednesday.
Prices are expected to remain low in 2015 and will contribute to the growth of countries importing oil and help reduce inflationary, external and fiscal pressures, according to the latest edition of Global Economic Prospects issued by the World Bank.
Oil prices have declined more than 50 percent in the last six months, reaching their lowest point in the last five and a half years.
Brazil, India, Indonesia, South Africa and Turkey are the countries that will be positively affected by falling oil prices as it is a huge burden on their current account deficit, according to the World Bank.
It also stated that low oil prices presented certain challenges for oil exporter countries as their growth outlook, as well as exploration and development investments, will be weakened, the report said, namely in shale oil resources and deep-sea oil fields.
“In oil-exporting countries, the sharp decline in oil prices is a reminder of significant vulnerabilities inherent in highly concentrated economic activity and the necessity to reinvigorate efforts to diversify over the medium and long term,” said the World Bank quoting Ayhan Kose, Director of Development Prospects.
“With oil likely to remain cheap for some time, oil-importing countries should lower or even eliminate fuel subsidies and rebuild the fiscal space needed to carry out future stimulus efforts,” added the World Bank, quoting its chief economist Kaushik Basu. “Emerging market economies would do well to invest in infrastructure and support social schemes vital to poverty reduction. Such policies can raise future productivity and reduce the fiscal deficit in the long run.”
