Global Economy: outlook

The Report of the International Energy Agency (IEA) World Energy Outlook 2020, reports a recovery in oil demand to pre-crisis levels in 2023.

The IEA is considering several scenarios for the development of energy markets after the pandemic until 2040. In the baseline scenario, the Agency considers an optimistic option: if the COVID-19 pandemic is controlled in 2021, the economy will return to pre-crisis levels.

The cost of oil will also increase if the fight against coronavirus, and as a result, the economic recovery, is delayed. But up to $ 59 per barrel by 2025 and up to $ 72 per barrel by 2040.

"In a more radical scenario, in which humanity accelerates the achievement of the climate goals of the Paris Agreement, it is assumed that oil costs $ 57 per barrel in 2025, but by 2040 it is reduced to $ 53 per barrel", the document says.

The IEA Report explains that the need to maintain a supply balance in the market will contribute to higher prices in the long term. And to encourage investment, prices need to rise to $ 70 per barrel over the next five years.

"After that, prices will stabilize in the range of 75-85 dollars per barrel", the outlook says.

Note that the IMF has improved its outlook estimates for the dynamics of the world economy. The US and Euro Area economies will decline by 4.3% and 8.3%, while China's GDP will grow by 1.9%; in 2021, the Chinese economy will grow by another 8.2%, while the EU countries will grow by 5.2%. Global GDP will fall by 4.4% this year, but will grow by 5.2% next year, according to the IMF report.

The European Central Bank says it is premature to extend emergency support to European economies, but growth in the region is slowing. However, the economic damage from the second wave of coronavirus is likely to be less significant, the ECB stressed.

Recessionary expectations have fallen sharply, and the majority (60% of global managers) believe that the global economy is at an early stage of economic recovery, according to a Bank of America survey.