Expensive oil would not boost GDP growth: Oxford's message for economies like Colombia
Oil prices have maintained an upward trend in recent days. Photo: Image generated with artificial intelligence.
TL;DR
- Emerging economies show resilience to temporary oil price shocks, with limited impact on GDP growth.
- Even at $140 per barrel for two months, emerging market growth is expected to remain solid.
- GDP growth in emerging economies might see a reduction of 0.1-0.2 percentage points at $100 oil and 0.4-0.7 percentage points at $140 oil.
- Aggregate emerging market growth for 2026 is projected around 4.1%, decreasing to approximately 3.9% even with higher energy prices.
- Inflation forecasts for emerging markets are raised to 4.4% for 2026, but most economies are expected to remain within central bank target ranges.
- Monetary policy response is expected to be cautious, with central banks likely to slow rate cuts rather than initiate hikes.
- Colombia and Russia are identified as exceptions, being more sensitive to inflationary pressures due to less room for monetary policy easing.
- Oil exporting nations like Nigeria, Kazakhstan, and Russia may benefit from high oil prices, while importing nations face greater inflationary and growth pressures.
- The impact of oil price shocks depends on magnitude and duration; temporary increases are manageable, but prolonged ones combined with financial stress could significantly alter the scenario.