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An advisor to the Prime Minister warns of the “risks of low oil” on fiscal policy and spending
Time: 09/04/2024 17:39:37 Read: 2,977 times
{Economic: Al-Furat News} The financial advisor to the Prime Minister, Mazhar Muhammad Saleh, warned today, Wednesday, of the “risks of a decline in oil revenues” with the decline in crude prices in global markets. Saleh told Al-Furat News Agency,
“First, there must be a systematic investigation into the fundamental factors causing the decline in crude oil prices in global markets and their rapid decline in the past few weeks, as
China is one of the world’s largest economies that import crude oil among nations, as its imports increase.” Of crude oil, about 10 million barrels of oil per day, and Iraq alone contributes about 10% to China’s need for oil, or approximately 30% of Iraq’s oil exports are directed towards the Chinese market. He stated,
"China's demand for oil is linked to the annual growth rates of its economy, and
it is a truly direct relationship.
The greater the growth in annual gross domestic product, the greater the demand for crude oil." Saleh pointed out,
“There is a parallel between increasing GDP and increasing oil consumption by a rate ranging from 0.5% to every 1% increase in GDP, although this parallel may change based on energy efficiency and market developments.”. He pointed out that
“with this slowdown in Chinese economic growth (which is the second largest economy in the world), it has begun to increase during the second half of this year, as the annual growth rate is expected to decline to about 4.5%, after it was 5. 4% at the beginning of the year, and
thus the decline in growth in the Chinese economy has become an urgent issue that greatly affects the global economy and the stability of demand in the energy market.” He noted,
"Chinese economic data are noticeable indicators of weakness, especially in the industrial and service sectors, as the Purchasing Managers' Index in China in August 2024, which is a main measure of economic activity, recorded a decline to its lowest level since six previous years." He continued,
"Such a decline reflects a decline in both domestic and external demand for goods and services, as new export orders in China fell in July for the first time in eight months, indicating a decline in global demand for Chinese products." The government advisor explained,
"The prices of new homes in China also rose, but at a very weak pace, which adds more pressure to the Chinese economy itself." He pointed out that
"international expectations indicate that growth in the gross domestic product in these countries will continue to decline to about 3.5% until the year 2028, which reflects the structural challenges facing the Chinese economy in the long term." Saleh said,
“Based on the above, oil prices witnessed a noticeable decline today, September 4, 2034, as Brent crude fell below $74 per barrel.
This sharp decline is attributed, as we mentioned earlier, to ongoing concerns about the slowdown in economic growth in China, which... "It negatively affected the demand for oil, which increased global markets' concern about the continued weakness of global demand for crude oil." He concluded by saying,
“The matter is related to Iraq, where the federal general budget issued by Law No. 13 of 2023 (the tripartite budget) is still hedging an annual hypothetical deficit of approximately 64 trillion dinars, and the price of a barrel of oil for the purposes of evaluating oil revenues in the budget during the past year is about $70 per barrel (as an annual average).
Therefore, fiscal policy may face the risks of a decline in oil revenues, by activating the necessary precautionary financial measures to sustain expenditures and in accordance with the priorities and principles set forth by the Federal Budget Law itself, whether in financing the deficit or in arranging public spending priorities.
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Time: 09/04/2024 17:39:37 Read: 2,977 times
{Economic: Al-Furat News} The financial advisor to the Prime Minister, Mazhar Muhammad Saleh, warned today, Wednesday, of the “risks of a decline in oil revenues” with the decline in crude prices in global markets. Saleh told Al-Furat News Agency,
“First, there must be a systematic investigation into the fundamental factors causing the decline in crude oil prices in global markets and their rapid decline in the past few weeks, as
China is one of the world’s largest economies that import crude oil among nations, as its imports increase.” Of crude oil, about 10 million barrels of oil per day, and Iraq alone contributes about 10% to China’s need for oil, or approximately 30% of Iraq’s oil exports are directed towards the Chinese market. He stated,
"China's demand for oil is linked to the annual growth rates of its economy, and
it is a truly direct relationship.
The greater the growth in annual gross domestic product, the greater the demand for crude oil." Saleh pointed out,
“There is a parallel between increasing GDP and increasing oil consumption by a rate ranging from 0.5% to every 1% increase in GDP, although this parallel may change based on energy efficiency and market developments.”. He pointed out that
“with this slowdown in Chinese economic growth (which is the second largest economy in the world), it has begun to increase during the second half of this year, as the annual growth rate is expected to decline to about 4.5%, after it was 5. 4% at the beginning of the year, and
thus the decline in growth in the Chinese economy has become an urgent issue that greatly affects the global economy and the stability of demand in the energy market.” He noted,
"Chinese economic data are noticeable indicators of weakness, especially in the industrial and service sectors, as the Purchasing Managers' Index in China in August 2024, which is a main measure of economic activity, recorded a decline to its lowest level since six previous years." He continued,
"Such a decline reflects a decline in both domestic and external demand for goods and services, as new export orders in China fell in July for the first time in eight months, indicating a decline in global demand for Chinese products." The government advisor explained,
"The prices of new homes in China also rose, but at a very weak pace, which adds more pressure to the Chinese economy itself." He pointed out that
"international expectations indicate that growth in the gross domestic product in these countries will continue to decline to about 3.5% until the year 2028, which reflects the structural challenges facing the Chinese economy in the long term." Saleh said,
“Based on the above, oil prices witnessed a noticeable decline today, September 4, 2034, as Brent crude fell below $74 per barrel.
This sharp decline is attributed, as we mentioned earlier, to ongoing concerns about the slowdown in economic growth in China, which... "It negatively affected the demand for oil, which increased global markets' concern about the continued weakness of global demand for crude oil." He concluded by saying,
“The matter is related to Iraq, where the federal general budget issued by Law No. 13 of 2023 (the tripartite budget) is still hedging an annual hypothetical deficit of approximately 64 trillion dinars, and the price of a barrel of oil for the purposes of evaluating oil revenues in the budget during the past year is about $70 per barrel (as an annual average).
Therefore, fiscal policy may face the risks of a decline in oil revenues, by activating the necessary precautionary financial measures to sustain expenditures and in accordance with the priorities and principles set forth by the Federal Budget Law itself, whether in financing the deficit or in arranging public spending priorities.
[You must be registered and logged in to see this link.]
