Most of the world’s economies are slowing down—except for oil producers

OPEC countries stand to gain from high fuel prices.
OPEC countries stand to gain from high fuel prices.
Image: REUTERS/Dado Ruvic
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The World Bank issued a bleak forecast for the global economy on June 7. In the six months since the organization’s last Global Economic Prospects report in January, Russia invaded Ukraine, China placed nearly 400 million people on lockdown in response to its biggest covid outbreak yet, and inflation has remained persistently and distressingly high.

As a result, the World Bank has cut its forecast for global GDP growth this year from 4.1% to 2.9%. “Several years of above-average inflation and below-average growth are now likely, with potentially destabilizing consequences for low- and middle-income economies,” the report noted. “It’s a phenomenon—stagflation—that the world has not seen since the 1970s.”

Most regions of the world saw their economic prospects dim in the first half of 2022. Europe and Central Asia, the region that includes Russia and Ukraine, took the worst economic hit; since January, the World Bank has revised its GDP growth projection for the area down from 3% growth to a 2.9% contraction.

Oil and gas producing countries benefit from rising fuel prices

The Middle East and North Africa, however, saw its 2022 GDP growth forecast improve from 4.4% to 5.9%. The bulk of the region’s economic boost came from oil producing states such as Saudi Arabia, Oman, Algeria, Iran, Iraq, and Kuwait—a list that includes four of OPEC’s five founding members. Overall, the fuel crisis set off by the Russian invasion of Ukraine and supply chain disruptions is expected to benefit OPEC countries’ economies; US president Joe Biden is reportedly mulling a trip to Saudi Arabia to ask crown prince Mohammed bin Salman to increase oil production.

The World Bank expects Guyana to similarly benefit from high oil and gas prices. The South American country, which is in the middle of building a $10 billion offshore oil project with ExxonMobil, saw the greatest increase in its GDP growth forecast for 2022 and 2023. The World Bank predicts Guyana’s economy will now double in size by the end of 2023.