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[이데일리 최정희 기자] 3.0% economic growth rate, 1.3% inflation rate. This is the state of the economy that the Bank of Korea predicted this year. The BOK’s analysis is that the growth rate exceeds 3% in 4 years due to the counterattack of the unprecedented epidemic of last year’s Corona 19, and the inflation gradually rises from 0% to 1%.
However, if the international oil price reaches 80 dollars per barrel within the year, the situation could be different. In particular, if oil prices rise due to a decrease in supply-side crude oil production such as a dispute in the Middle East, the inflation rate increases and the growth rate decreases, raising the possibility that inflation will burden growth. In addition, the forecast for a current account surplus of $64 billion, which serves as a safety plate for foreign capital outflows, could be reduced. International oil prices are emerging as a key variable that will influence the Korean economy.
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Overseas international oil price forecast of 70-80 degrees Celsius
As the BOK predicted a 3.0% growth rate and 1.3% inflation rate last month, the crude oil import unit price (average price paid when importing crude oil from overseas) is $56 per barrel. Under such circumstances, if oil prices rise to $70 or $80, unexpectedly, the growth rate and inflation forecast will inevitably change. In fact, the recent trend puts weight on the possibility that oil prices will remain at a higher level than the BOK forecast.
According to the New York Merchandise Exchange (NYMEX) on the 8th (local time), Western Texas crude oil (WTI) rose to $65.05 per barrel, up 34.1% since the beginning of the year.
Brent oil is showing a rapid rise, surpassing $71 during the intraday. WTI and Brent oil recorded 56.6 dollars and 59.6 dollars, respectively, on average daily (closed price) until the 8th of this month, and Dubai oil, which is mainly imported by Korea, also showed a level of 58.6 dollars. It is slightly higher than the crude oil import price that the BOK assumed.
Overseas investment banks (IBs) are predicting that oil prices could rise to 80 dollars. The Middle East dispute has emerged as a new variable, with abundant liquidity of funds and anticipation of an economic recovery stimulating the rise in oil prices.
On the 7th (local time), Saudi Arabia’s oil facilities were attacked by Yemeni rebels Huti. Blocking the drone bombing did not have a direct impact on crude oil production, but oil prices rose as concerns over the overheating of the Middle East conflict could disrupt crude oil production. Goldman Sachs predicted that Brent oil would reach $75 in the second quarter and $80 in the third quarter, and UBS also forecasted it at $75.
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◇ Inflation rate of petroleum products rose three months from the previous month
When oil prices rise, inflation rises and the current account surplus narrows. Growth rates could also be lowered if they soar to levels that could negatively affect the economy.
In fact, the rise in oil prices, which started from the end of last year, is slowly affecting inflation. The inflation rate of petroleum products in February was still negative (-6.2%) from a year ago, but rose 1.9% from the previous month, showing an uptrend for three consecutive months. The consumer inflation rate rose 1.1% from the same month last year, recording the highest level since February last year (1.1%). Further increase in oil prices is expected to affect the inflation rate. In fact, import inflation, a leading indicator of consumer inflation, rose 2.8% for three months from the previous month in January due to the rising exchange rate and oil prices. Producer prices also rose 0.8% from the same month last year in January, for two consecutive months, and 0.9% from the previous month, showing an uptrend for three months. The expected inflation rate, which shows future inflation forecasts, was 2.0% in February, the highest since August 2019 (2.0%). This is not only the result of the soaring agricultural product prices, but also the rise in the prices of various raw materials such as oil, soybeans and aluminum.
If oil prices rise, the current account surplus is expected to shrink. Considering the rise in oil prices, the BOK predicted that the current account surplus would fall to $64 billion this year from last year ($753 billion), but this is because the crude oil import unit price is $56. Even if exports are good, if the price of imported crude oil rises, the amount of dollars earned through trade decreases.
In January this year, the current account recorded a surplus of $7 billion, but the impact of rising oil prices has not been reflected yet. The crude oil introduction unit price in January of last year was 68.8 dollars, and in January this year it was only 51.2 dollars. This is the effect of last year’s oil price peak in January, and as the corona 19 has continued to decline since then, oil prices in the first half of this year are likely to rise by more than 50% compared to the same month last year, reducing the current account surplus.
If oil prices rise due to the global economic recovery, major domestic export items will show good performance and increase the growth rate. However, if the oil price rises due to supply effects, it may adversely affect the growth rate.
A BOK official said, “Depending on the reason why the oil price rises, the growth rate may be good or bad. If the oil price rises from the supply side, if the demand for the product remains the same, the cost burden on companies will increase.”
In February, the raw material purchase price index among the BSI of the manufacturing industry recorded 131, rising for three consecutive months. In terms of numbers, it is the highest since May 2011 (133) when oil prices exceeded 100 dollars. The current oil price is at the level of a sweet spot (a price that both producers and consumers are satisfied with), but it is an analysis that the cost of purchasing raw materials experienced by companies has increased as the price has risen from the bottom.
“The majority of the prospective institutions are forecasting that oil prices will rise by 60-70 dollars, and the inflation rate could be higher.” “If the service industry is bad, the economic situation is worse than expected, but if prices rise to 2% due to the rise in raw material prices such as oil prices, the rise in inflation could go to a level that puts a burden on the economic recovery.”