For the last 75 years, almost every economic crisis has been preceded by an oil price spike. The worry now is that low energy prices are pushing the global economy into a tailspin.
While the idea is counter-intuitive, it’s gaining traction because a growing share of the world’s consumers and investors are in the very places getting hammered by the rout in commodities prices. Apple Inc., for example, blamed weaker sales last quarter on lower economic growth in some oil-rich countries.
“I never thought I would wish, let alone pray, for higher oil prices, but I am,” said Han de Jong, chief economist at ABN Amro Bank NV in Amsterdam. “The world badly needs higher oil prices.”
The problem is that the world’s economy relies far more today on emerging countries than 15 or 25 years ago — the last periods of ultra-low oil prices. In another twist, the U.S. has emerged to vie with Saudi Arabia and Russia as the world’s biggest oil producer. In the past, the harm done to exporters was more than offset by importers’ gains.
And with the exception of China and India, most big emerging countries are oil and commodities rich. Such economies now account for about 40 percent of global gross domestic product, about double their share in 1990, according to the International Monetary Fund.
From Russia to Saudi Arabia, Nigeria to Brazil, economic growth is slowing down to a crawl and, in many cases, is contracting.
“Many oil exporters face very difficult circumstances,” said Gian Maria Milesi-Ferretti, the IMF’s deputy director of research. “So now they have to cut spending significantly, and this will have an impact on economic growth.”