About eighteen months ago I took a look at then IMF projections - which at the time called for growth closer to 5% a year than 4% - and argued that they were too optimistic. I argued from the oil constraint - the projections implied a level of growth in oil supply that was unlikely to materialize. What we have seen in the interim is somewhat slower growth (especially in Europe, but also in the US and China) with stagnant global trade. Meanwhile oil supply has indeed been roughly flat, keeping prices persistently high, but the global economy is becoming steadily more oil efficient, allowing a certain amount of economic growth without a growing oil supply:
The data here are the IMF's PPP GDP deflated with BEA estimates of GDP deflators and then BP oil production used to produce an estimate of gross world product per barrel of oil.
I think even the IMF's now reduced forecast of 3-4% economic growth is likely to place considerable pressure on oil prices, but 2-3% world growth can probably be sustained at current prices just out of efficiency gains.
2 comments:
The singularity will come to save us anyway
Need to adjust for population growth.
Also, how much driven by bailouts and debt-based spending?
How much GDP growth driven by rising costs of environmental cleanup, disasters, and pollution in general?
How much due to rising health care expenditures, much of which just goes into maintenance and repair?
How much goes into rebuilding that which was destroyed in war or other conflict?
We need to abandon GDP, or, at least, push it to the back burner.
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