JPMorgan says such a shock would be enough to reduce global growth by more than three quarters
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Jan 25, 2022 • 13 hours ago • 1 minute read • 8 Comments
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The price of oil hasn’t even reached US$100 a barrel, but that’s not stopped economists at JPMorgan Chase & Co. from war-gaming what a surge to US$150 — this quarter — would mean for the world economy.
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In a report published Friday, economists including Joseph Lupton and Bruce Kasman warned that such a shock would be enough to reduce global growth by more than three quarters, to around 0.9 per cent in the first half of the year — versus the 4.1 per cent they currently forecast.
Inflation at the worldwide level would also more than double, to 7.2 per cent rather than the projected 3 per cent, in the bank’s scenario. That could potentially force central banks to constrain monetary policy even faster than they now intend, the analysts said.
“Oil shocks have a long history of driving cyclical downturns,” they wrote. “The latest geopolitical tensions between Russia and Ukraine raise the risk of a material spike this quarter.”
