The world’s foremost financial organisation, International Monetary Fund (IMF) has said that rising oil prices may lead to high inflation and slow growth across the world.
It also stated that the rising oil prices may re-echo the 1970s, when geopolitical tensions caused fossil fuel prices to spike.
In a new report titled, ‘Lower oil reliance insulates world from 1970s-style crude shock’, which was made available to The Tide,  IMF said the war in Ukraine and sanctions on Russia are causing substantial economic spillovers, notably for energy.
“For some, rising oil prices may echo the 1970s, when geopolitical tensions also caused fossil fuel prices to spike.
“Memories of the high inflation and slow growth that followed, known as stagflation, have fueled concerns about a possible repeat. Importantly, though, times have changed”, IMF stated.
It continued that Brent crude, the global oil benchmark, had risen to a seven-year high of about $100 before the Ukraine crisis pushed it above $130.
“The Central banks, too, have changed, since the 1970s. More are independent today, and the credibility of monetary policy has broadly strengthened over the intervening decades.
“We expect global growth to be close to the pre-pandemic average of 3.5 per cent, even after our April World Economic Outlook lowered projections, but it still could slow more than forecast, and inflation could turn out higher than expected”, it stated.

By: Corlins Walter