By Andy Sambidge
Oil price stability unlikely in short-term until political uncertainty ends in the MENA region
Political uncertainty in the Middle East and North Africa is likely to continue to create a volatile oil market for at least the short-term, Deloitte has said in its global economic outlook for the second quarter of the year.
Its economists said the uprisings in the region, coupled with the Japanese earthquake and tsunami, had "cast a shadow over the global economy" during the first quarter of 2011.
In the short run, the political environment in the Middle East is likely to remain fragile, according to the report.
"Oil prices may continue on a volatile path until the political climate stabilises. Given the influence of the region on the global economic recovery, developments in the Middle East and North Africa will be monitored closely by the rest of the world," Deloitte added.
The report said the events in the MENA region had prompted a renewed focus on rising energy costs and higher food prices.
The repercussions will likely shift the global economic landscape in the near term, it added.
"Since our last quarterly outlook, the world has been awash with unexpected events," said Ira Kalish, director of global economics, Deloitte Research. "
In this case, political events in the Middle East and the ruinous earthquake and tsunami in Japan have cast a shadow over the global economy."
The global report also said the outlook on the United States economy was optimistic, while the outlook for India and Brazil remained healthy.
Deloitte said that in China, rising oil prices and changing demographics would lead the economy to expand at "a more sustainable pace".
This year, the global economy has witnessed unreprecedented setback and it is only a matter of time before its full impacts would began to manifest.
Nature in its unquestionable wisdom has decided to feed nations with cocktail of surprises ranging from devastating earth quakes in Japan to needless war in Africa, and of recent, destructive phenomenon in America.
The combination of these deadly happenings is a perfect recipe to slow down even the best economies in the world. The marginal growth recorded by the â€œCRIBS" countries obviously would not be sufficient to off-set plethora of losses suffered by other regions.
As if these challenges are not enough, we just learnt that the Japaneseâ€™s economy has officially entered into recession further casting doubt on already terrible outlook.
Truly, the world economy is worse off only purposeful and synergetic approach by leading and developing economies could reverse these setbacks albeit at huge sacrifice.