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Chart: Which Countries Are Damaged Most by Low Oil Prices?

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Chart: Which Countries Are Damaged Most by Low Oil Prices?

Which Countries Are Damaged Most by Low Oil Prices?

This week’s chart looks at costs per barrel, exports, and total oil production.

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Oil is by far the world’s most-traded commodity, with $786.3 billion of crude changing hands in international trade in 2015.

While low commodity prices can hurt any major producer, oil prices can have a particularly detrimental effect on oil-rich economies. This is because, for better or worse, many of these economies hold onto oil as an anchor for achieving growth, filling government coffers, and even fueling social programs.

If those revenues don’t materialize as planned, these countries turn increasingly fragile. In the worst case scenario, an extended period of low oil prices can cause the fate of an entire regime to hang by a thread.

Which Countries are Damaged Most by Low Oil Prices?

This week’s chart explores three key pieces of high-level data on the oil sector from 2015: the cost of production ($/bbl), total oil production (MMbbl/day), and the world’s top exporters of oil ($).

The general effects of these factors are pretty straightforward:

  • Countries that have a high cost of production per barrel are going to find it tough to make money in a low oil price environment
  • Countries that are major producers or exporters tend to rely on oil revenues as a major economic driver
  • Oil producers that are major exporters also have to deal with another factor: the effect that low oil prices may have on their currencies

Here are some particular countries that are under duress from current energy prices:

Venezuela
Back in the Hugo Chรกvez era, things were better in Venezuela than they are today. Oil prices were mostly sky-high, and this enabled the socialist country to bring down inequality as well as put food on the table for its citizens. However, as the World Bank described in 2012, since oil accounted for “96% of the country’s exports and nearly half of its fiscal revenue”, Venezuela was left “extremely vulnerable” to changes in oil prices.

And change they did. Oil prices are now less than 50% of what they were when the World Bank wrote the above commentary. Partially as a result, Venezuela is having all sorts of problems, ranging from runaway hyperinflation to shortages in almost everything.

Venezuela’s cost per barrel isn’t bad at $23.50, but the country is the world’s ninth-largest oil exporter with $27.8 billion of exports in 2015. If oil prices were north of $100/bbl, Venezuela’s situation would be a lot less dire.

Russia
Russia is the world’s second-largest crude oil exporter, shipping $86.2 billion to countries outside of its borders in 2015. That’s good for 11.0% of all oil exports globally. Russia’s cost of production in 2015 was relatively low, at $17.30 per barrel.

But is declining oil revenue influencing foreign policy? It’s hard to say – but we do know that, historically, leaders have turned to nationalist projects during tougher economic times. In this case, Putin may have focused Russia’s national attention on Ukraine as a way to deflect from a less-than-rosy economic outlook.

Brazil
All is not well in Brazil, where President Dilma Rousseff could be impeached by as early as next week.

Brazil is the ninth-largest producer of oil globally, pumping out about 3.2 million barrels per day. However, a bigger concern may be the cost of producing oil in the country. The production cost in 2015 was a hefty $48.80/bbl, among the most expensive of major oil producers.

The post-Olympics hangover will be a challenging one in Brazil, as it faces its worst economic crisis in 30 years. The largest country in Latin America had its economy shrink 5.4% in the first quarter of this year.

Nigeria

Nigeria, which will soon be one of the three most populous countries in the world, is also very reliant on oil revenues to prop up its economy.

The country has a $7 billion budget deficit due to lower oil revenues, and it recently also dropped its peg to the U.S. dollar on June 15th. The naira fell 61% against the dollar since then, wreaking havoc throughout the economy. Nigeria also recently lost its title of “Africa’s largest economy”, handing it back to South Africa.

Nigeria is the sixth-largest exporter of oil, with annual exports of $38 billion in 2015. Its cost of production is higher than average, as well, at $31.50 per barrel.

Canada

Canada’s economy is largely diversified, but it is also the world’s fifth-largest exporter of oil with $50.2 billion of exports in 2015. Costs are also high in the oil sands, and the average cost of production per barrel was $41.10 throughout the country.

The oil bust has dragged the energy-rich province of Alberta into a recession, and the Canadian dollar is also severely impacted by oil prices for multiple reasons. Albertaโ€™s economy is about to have its largest two-year contraction on record, while the provincial governmentโ€™s deficit has exploded to $10.9 billion.

Energy investment in Alberta is forecast to be about half of the total from 2014. Meanwhile, economic conditions elsewhere have also been impacted, as areas such as housing, retail, labor markets, and manufacturing have all felt the pinch.

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Chart of the Week

The Economies Adding the Most to Global Growth in 2019

Global economics is effectively a numbers game – here are the countries and regions projected to contribute the most to global growth in 2019.

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The Economies Adding the Most to Global Growth in 2019

Global economics is effectively a numbers game.

As long as the data adds up to economic expansion on a worldwide level, it’s easy to keep the status quo rolling. Companies can shift resources to the growing segments, and investors can put capital where it can go to work.

At the end of the day, growth cures everything – it’s only when it dries up that things get hairy.

Breaking Down Global Growth in 2019

Today’s chart uses data from Standard Chartered and the IMF to break down where economic growth is happening in 2019 using purchasing power parity (PPP) terms. Further, it also compares the share of the global GDP pie taken by key countries and regions over time.

Let’s start by looking at where global growth is forecasted to occur in 2019:

Country or RegionShare of Global GDP Growth (PPP) in 2019F
China33%
Other Asia (Excl. China/Japan)29%
United States11%
Middle East & North Africa4%
Euro Area4%
Latin America & Caribbean3%
Other Europe3%
Sub-Saharan Africa2%
Japan1%
United Kingdom1%
Canada1%
Rest of World8%

The data here mimics some of the previous estimates we’ve seen from Standard Chartered, such as this chart which projects the largest economies in 2030.

Asia as a whole will account for 63% of all global GDP growth (PPP) this year, with the lion’s share going to China. Countries like India and Indonesia will contribute to the “Other Asia” share, and Japan will only contribute 1% to the global growth total.

In terms of developed economies, the U.S. will lead the pack (11%) in contributing to global growth. Europe will add 8% between its various sub-regions, and Canada will add 1%.

Share of Global Economy Over Time

Based on the above projections, we were interested in taking a look at how each region or country’s share of global GDP (PPP) has changed over recent decades.

This time, we used IMF projections from its data mapper tool to loosely approximate the regions above, though there are some minor differences in how the data is organized.

Country or RegionShare of GDP (PPP, 1980)Share of GDP (PPP, 2019F)Change
Developing Asia8.9%34.1%+25.2 pp
European Union29.9%16.0%-13.9 pp
United States21.6%15.0%-6.6 pp
Latin America & Caribbean12.2%7.4%-4.8 pp
Middle East & North Africa8.6%6.5%-2.1 pp
Sub-Saharan Africa2.4%3.0%+0.6 pp

In the past 40 years or so, Developing Asia has increased its share of the global economy (in PPP terms) from 8.9% to an estimated 34.1% today. This dominant region includes China, India, and other fast-growing economies.

The European Union and the United States combined for 51.5% of global productivity in 1980, but they now account for 31% of the total economic mix. Similarly, the Latin America and MENA regions are seeing similar decreases in their share of the economic pie.

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Map: Cities With the Most Ultra-Rich Residents

What cities are the world’s ultra-rich flocking to? This map looks at ultra high net worth individual (UHNWI) growth rates in cities around the world.

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Mapped: The Cities With the Most Ultra-Rich Residents

As of 2018, there is a grand total of 198,342 ultra high net worth individuals (UHNWIs) globally with assets over US$30 million, according to the most recent edition of Knight Frank’s Wealth Report.

Although these millionaires and billionaires can be found all over the globe, the reality is that most of the world’s ultra-rich population tends to congregate in world-class cities.

Generally speaking, UHNWIs are looking to live in places that are conducive to safeguarding and growing their wealth, but that also give them access to top-end amenities that allow them to live comfortably and luxuriously.

Top 10 Cities for the Ultra-Rich

To start, we’ll look at a list of global cities, organized by expected number of UHNWIs in 2023:

RankCityUHNWIs (2018)UHNWIs (2023e)Change (%)
#1๐Ÿ‡ฌ๐Ÿ‡ง London4,9446,01521.7%
#2๐Ÿ‡ธ๐Ÿ‡ฌ Singapore3,5984,39322.1%
#3๐Ÿ‡ฏ๐Ÿ‡ต Tokyo3,7324,12510.5%
#4๐Ÿ‡บ๐Ÿ‡ธ New York City3,3783,89115.2%
#5๐Ÿ‡จ๐Ÿ‡ณ Beijing1,6732,24734.3%
#6๐Ÿ‡ซ๐Ÿ‡ท Paris1,6672,03121.8%
#7๐Ÿ‡ฐ๐Ÿ‡ท Seoul1,5942,02026.7%
#8๐Ÿ‡น๐Ÿ‡ผ Taipei1,5191,86422.7%
#9๐Ÿ‡จ๐Ÿ‡ญ Zurich1,5071,79619.2%
#10๐Ÿ‡จ๐Ÿ‡ณ Shanghai1,2631,69033.8%

London continues to top the list, with a roster of 4,944 ultra-rich residents today and the projected growth over the coming years to eclipse the 6,000 mark by 2023.

Tokyo has the second highest amount of UHNWIs today, but the city is adding them at a slower rate than other rival cities. As a result, Singapore will move into the #2 spot overall by 2023, with an expected total of 4,393 high net worth residents.

Finally, it’s worth noting that only two cities on the top 10 list are expected to see growth above a 30% clip over this five-year period. Shanghai and Beijing could be cities to watch for decades to come, as they add millionaires and billionaires at a faster rate than any of the other heavyweights.

Fastest Growing Cities

Where are the billionaire meccas of the future?

Here are the 10 cities that are expected to add UHNWIs the fastest between 2018-2023:

RankCityUHNWIs (2018)UHNWIs (2023e)Change (%)
#1๐Ÿ‡ฎ๐Ÿ‡ณ Mumbai7971,10138.1%
#2๐Ÿ‡ฎ๐Ÿ‡ณ Delhi21129137.9%
#3๐Ÿ‡ต๐Ÿ‡ญ Manila 11515736.5%
#4๐Ÿ‡จ๐Ÿ‡ณ Shenzhen52770834.3%
#5๐Ÿ‡จ๐Ÿ‡ณ Beijing1,6732,24734.3%
#6๐Ÿ‡จ๐Ÿ‡ณ Guangzhou39452934.3%
#7๐Ÿ‡จ๐Ÿ‡ณ Shanghai1,2631,69033.8%
#8๐Ÿ‡ฎ๐Ÿ‡ฉ Jakarta40152931.9%
#9๐Ÿ‡ฒ๐Ÿ‡พ Kuala Lumpur37649631.9%
#10๐Ÿ‡ฐ๐Ÿ‡ท Seoul1,5942,02026.7%

Not surprisingly, all 10 of these cities are located in Asia.

Two Indian cities (Delhi and Mumbai) top the list, and are likely to add nearly 40% to their ultra-rich populations over the next five years. China also has a strong showing here.

Interestingly, just missing the above top 10 were a few non-Asian cities: Auckland (#11), Madrid (#12), Munich (#13), and Nairobi (#14) are all expected to grow their UHNWI populations by roughly 25% by 2023.

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