The April 2022 issue is subtitled “War Sets Back Global Growth.” According to this, the conflict in Ukraine has caused a humanitarian disaster with economic consequences, which is slowing down the world economy and increasing inflation. In addition, it is a worldwide phenomenon, and we all feel it at home as well, that fuel and food prices, for example, have risen significantly.
According to IMF estimates, global economic growth will slow down to 3.6% in 2022 and 2023 from 6.1% in 2021, which is 0.8 and 0.2 percentage points lower than in 2022. January forecast showed. Within this, the organization expects an even lower expansion of 2.8% and 2.3% in the Eurozone.
The IMF’s inflation forecast for 2022 is 5.7% in advanced economies and 8.7% in emerging markets and developing economies. Although the Monetary Fund expects to ease later, inflation may be higher in the short term for a variety of reasons, including widening supply-demand mismatches and rising commodity prices.
In addition, war and recurrent disease outbreaks may extend supply disruptions, further driving up costs. Compared to the European average and the Eastern European region, inflation of 10.3% is forecast for this year in the country.
According to the IMF’s forecast, the world economy will practically “straighten out” this year, as Europe enters recession, China slows down significantly, and the financial conditions of the United States tighten. Calculated at purchasing power parity, the global gross domestic product is expected to grow by 3.6 percent in 2022.
In addition, energy prices also ran away as a result of the situation. Bloomberg tracks global fuel prices, including comparisons of gasoline and diesel. According to their data, the price of gasoline in Northwestern Europe has risen significantly and is now higher than that of diesel, which is a change compared to previous periods.
These conditions will also have a clear inhibitory effect on trade, which means that e-retailers must also prepare for a recession in the short term. It would have been premature to talk about recovery for the time being, since no one dares to estimate the end of the war.
Energy prices have a significant impact on our lives through utility costs, which is why many people are concerned about why and how energy prices change; and how much they will pay for petrol, electricity or gas in the future due to these changes. In the article below, we have prepared a short summary of how the events taking place in the energy sector affect fuel prices and, through this, our daily lives.
We ourselves can experience every day how quickly the price of gasoline and diesel can change at gas stations, and there can even be a significant difference between individual gas stations. Changes in fuel prices mostly depend on two factors: changes in oil prices and the dollar-forint exchange rate. Because in order to have fuel, we need crude oil, which must be purchased from an oil producer. Slightly simplified: the cheaper the producer gives the oil, the cheaper the gasoline will be, and the opposite is also true: the higher the price of oil, the more expensive gasoline and diesel will be at the wells.
The price of oil is determined by supply and demand factors: in an ideal situation, the amount of oil extracted from oil wells should be as much as we use. However, this rarely happens. If the extraction is more than the use; then the level of stocks accumulated in oil storage rises and in this case the price of oil falls. This is comparable to when e.g. customers do not come to a store and the goods remain on the seller’s neck. In such cases, the seller announces promotions, i.e. lowers the price so that the products sell better. A similar trend is taking place in the case of oil. And if oil consumption is more than oil production, then oil stocks start to decrease and then prices rise.
The organization called the Association of Petroleum Exporting Countries, also known as the oil cartel or OPEC, has a great impact on the balance of production and consumption. This organization includes most of the oil-producing countries in the Middle East and South America and accounts for approx. has over 40%. These countries meet regularly, set a target price (currently at the $70 level), and adjust production in such a way as to drive the current price in the direction of the target price. If the current price is higher than the set target price, production will be increased and prices will start to decrease as a result. If the current market price is lower than the target price, they cut back on production and try to achieve a price increase.
If this mechanism were to work perfectly, the oil price would always be just as much as the OPEC target; however, if we look at the evolution of oil prices, this is far from the case. The balance of supply and demand is also affected by many other factors: non-OPEC oil producers, natural disasters, wars, and new technologies.