The perils and blessings of low cost oil for growth markets

OREANDA-NEWS. Without a doubt, growth markets have presented a remarkable story during the past two decades. Specifically in the aftermath of the global financial crisis, all eyes were on those markets that presented a promise of growth, with the U.S., Europe, Japan and most other developed economies stagnant or even in decline. Though many developing countries witnessed high-paced growth, some of the most impressive growth and development happened in the bigger emerging economies, most notably the ‘BRICs’. While at the same time, Africa emerged as one of the world’s new frontiers of growth.

It remains to be seen what will happen to the oil price, but it is widely expected that the current low price level will not be structural and an increase will occur again eventually. Though this might be good news for the net oil exporting countries and their governments, it is essential that they seize the current moment to reform and diversify their economies. For those growth markets heavily depending on oil imports, it is equally important to use the oil price windfalls wisely and prepare their economies for continued growth and development.