Risk of Oil Price Shock: Inflation and Economic Vulnerability Analysis

Risk of Oil Price Shock: Inflation and Economic Vulnerability Analysis

Oil price increases tend to impact the global economy more severely than price declines. The most immediate effect is a sudden surge in headline inflation, which can strain economies depending on their fuel import dependency, transport sector size, public debt levels, and trade openness.

Key variables influencing vulnerability include the share of transport costs, net fuel imports, public debt to GDP ratio, and the degree of trade integration. Among nations, Jordan, South Africa, and Thailand are identified as particularly vulnerable to oil price shocks. Conversely, countries such as the UAE, Switzerland, and Peru show relatively lower risk exposure.

Monitoring these economic indicators is critical for assessing the broader impact of rising oil prices on inflation and economic stability worldwide.

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• Global Inflation Trends
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