Oil Prices Blamed in IMF Report on Economic Woes
The Venice summitÛªs forecast of an ÛÏimminent threatÛ of worldwide recession and unemployment has fsen given a strong statistical underpinning by a staff report of the International Monetary Fund which places the blame primarily on the rapid escalation of oil prices in 1979 and 1980.</br></br>Normally, the IMF's midyear analysis is circulated privately, although its thrust has become known generally. This year, a decision was made to present the full analysis publicly, an indication of how seriously the world economic outlook is viewed by the international agency. The report was published yesterday.</br></br>A key conclusion of the IMF analysis is that the level of consumer prices in ( the major industrial nations in the first half of 1980 is roughly close to 5 percentage points over what it would have been without a $17.65-per-barrel oil price increaseÛÓa 137 percent hikeÛÓ from 1978 through the first quarter of ,1980.</br></br>In other words, when inflation in the seven summit countries accelerated from less than 7 percent in the closing months of 1978 to 14 percent in early 1980, 5 of those 7 points of increase were due mostly to oil prices.</br></br>A more precise analysis contained in the report suggests that the actual impact was 4.5 points, but when allowance is made for sympathetic movements of non-oil energy prices, it would add ÛÏconsiderably to the 4.5 percent estimate of the aggregate price impulse.Û