Sunday, February 27, 2011

Oil price shocks and current accounts


The sensitivity chart shows that a oil price shock is not going to help everyone the same way. For oil producers, the current account surplus will increase. While those countries that have high oil imports will see deterioration of their terms of trade and a decline in their current account. Many of these countries are not in good financial shape, so the price increase will further enhance the economic difficulties of those with debt problems.

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