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World growth for this year has been forecast at a
3 decade high by the International Monetary Fund, the world's leading
financial watchdog. But this upbeat forecast for the current year
will be followed by a slowdown next year. Record oil prices is an
alarm to the world to take action to boost production or reduce energy
use to prevent a global economic slowdown. The impact of rising oil
prices, however is estimated to be "moderate", especially
compared with the recession of the mid-1970s. Infact, many feel that
slowdown and subsequently a decline in demand for oil will reduce
the pressure on oil prices.
To read why are oil prices rising, click here.
Why
are oil prices rising?
The world economy is forecast to expand by 5% this year but will
slow to 4.3% next year, a downward revision of 0.1 percentage points
from earlier spring forecasts. If the recent rise in oil prices
of US$8 a barrel sustain for a year, it would wipe about 0.5 of
a percentage point from growth. As per the ADB:
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