CESEE and the Impact of China and Russia
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 6: Oil exporters’ contribution to global imbalances
In this chapter I shall briefly review oil-exporting countries’ contribution to the accumulation of global imbalances and their possible role in unwinding such imbalances. The ‘recycling’ of petrodollars from the oil producing countries back to Western banks and onward, for example to Latin American countries, was discussed widely during the first and second oil crises in the 1970s and 1980s. The real value of world fuel exports reached its peak in 1979 and 1980 before declining drastically during the mid-1980s. However, more recently the real value of fuel exports exceeded its previous peak as early as 2005 as the volume of fuel exports grew and the price of crude oil continuously increased between 2000 and 2008 (see also IMF, 2006). Moreover, prices of many raw materials follow the price of oil relatively closely, which can reinforce the effects of oil price on global imbalances. Figure 6.1 shows the evolution of current account balances in the world’s major economic areas in nominal US dollars. We can see that in nominal terms global imbalances remained relatively stable up until the beginning of the 2000s, when they started to increase. On the surplus countries’ side, China has received a great deal of attention in the media and policy debates, but in fact OPEC together with other major oil exporters (Russia, Norway and Kazakhstan) have had larger combined current account surpluses than China. As is well known, Japan, Germany and the newly industrialized countries of Asia have also had relatively large current account surpluses. In the case of Japan the surpluses (even in nominal terms) have been quite high since the mid-1980s, whereas for Germany the large current account surpluses did not emerge until the mid-2000s. For Germany the economic reforms of the early 2000s, especially in the labour market and wage setting, have often been credited with sparking off the country’s tremendous export growth.
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