20180523-NATIXIS-Watch_out__An_oil_shock__8页_836kb

Flash Economics Summary

Core Content

This document discusses the economic impact of a significant oil price increase from 2017 to 2018, focusing on its effects on real income, inflation, and growth forecasts. It highlights how the rise in oil prices has been overlooked by many analysts in their growth predictions, leading to an underestimation of the real economic burden.

Main Points

• Oil Shock Overview:
  The price of Brent crude oil rose from $45 to $80 per barrel in one year (May 2017 to May 2018), representing a real oil shock due to the rise in prices even after considering currency appreciation (euro).

• Impact on Real Income:
  The oil price increase reduced real income by:

  • 0.7 percentage point of GDP in the United States
  • 1.5 percentage point of GDP in the euro zone
  • 0.9 percentage point of GDP in Japan
  • 1.9 percentage point of GDP in non-oil exporting emerging countries

• Inflationary Effects:
  The oil price rise contributed to inflation increases of:

  • 0.6 percentage point in the United States
  • 0.4 percentage point in the euro zone
  • 0.5 percentage point in Japan
  • 0.6 percentage point in emerging countries

• Growth Forecasts:
  Despite the oil shock, growth forecasts from institutions like the IMF and OECD have not fully accounted for its impact. The document suggests that these forecasts may be overly optimistic and fail to reflect the actual economic burden.

• Economic Indicators:
  Charts and tables show the correlation between the oil price rise and economic indicators such as PMI, inflation, and interest rates, indicating a slowdown in economic activity.

Key Information

• Data Sources: Datastream, OECD, and Natixis.

• GDP Growth Forecasts (Table 2):

  • United States: 2.3% (2017), 2.7% (2018), 2.5% (2019)
  • Euro Zone: 2.5% (2017), 2.2% (2018), 2.0% (2019)
  • Japan: 1.6% (2017), 1.2% (2018), 0.9% (2019)
  • World: 3.8% (2017), 3.9% (2018), 3.9% (2019)

• Energy Weight in CPI (Table 1):

  • United States: 7.5%
  • Euro zone: 9.7%
  • Japan: 7.9%
  • Emerging countries (excluding Russia and OPEC): 20.3%

• Economic Indicators:
  Charts 4A and 4B show a downturn in the economic cycle, with a decline in composite PMI indices. Charts 7A and 7B illustrate rising expected inflation and long-term interest rates.

Conclusion

The document concludes that the growth forecasts appear to ignore the significant negative impact of the oil price shock on real income and inflation. This oversight may lead to an inaccurate understanding of the current economic situation.

Disclaimer

• The document is intended for professional and qualified investors only.
• It is strictly confidential and not to be disclosed to third parties without consent.
• It does not constitute a financial analysis or investment recommendation.
• Natixis is not liable for any inaccuracies or omissions.
• The information is based on public data and not subject to independent verification.
• The document may be subject to specific legal restrictions in various jurisdictions.

Regulatory Information

• Natixis is supervised by the ECB, ACPR, AMF, and other financial authorities in various countries.
• In the U.S., the report is distributed only to major institutional investors.
• In Canada, Australia, Hong Kong, and other regions, there are specific legal and regulatory restrictions on distribution and use.

This summary captures the key economic impacts of the oil price shock and the regulatory context surrounding the document.