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In yesterday’s blog post, we spoke of the how in the private sector. This blog will focus on the public sector and which countries benefit the most from these low energy prices. Commodity pricing is as much an art as it is a science; the fundamentals of supply and demand clarify most of these fluctuations, however they do not properly explain the exaggerated influence prices. The saturated, oversupplied market is now creating volatility for producers, but opportunities exist for speculative nations looking to stabilize or expand their global economic footprint.
is one such country that is looking steady. With the consumer credit market settling to normal levels, only the sovereign debt remains outstanding. According to a recent report, , due to the country’s reliance on imports. On the other hand, . Lower oil prices have pushed down the values of both drilling and refining companies by over 50%, giving a chance to procure an abundance of discounted, foreign assets. With market capitalization at an all-time low, Asia’s third largest economy can hedge against future increases in energy prices.
As with any capitalistic movement, economic revivals in some parts of the world will extinguish others; the spark seen in countries like the United States is an antithesis to petrol-states such as , , and . The economies of petrol-states often rely on oil and gas to fuel growth by over 35%. Furthermore, without proper diversification, these nations suffer from the natural resource curse. It is a paradoxical situation in which countries with copious amounts of non-renewable resources experience stagnant growth or even economic collapse. When these economies began to focus extensively on a single sector, such as or , they neglect vital sectors like , , and for comprehensive financial development.
Be sure to share your thoughts on this global economic phenomenon in a comment below!
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