Loss of Competitiveness in Oil-Exporting Countries


CEIC Macro Watch Global #41 - February 27, 2015 The sharp fall in oil prices during the second half of last year had major implications for the global economy and especially the major oil-exporting countries in the Middle East and North Africa (MENA) region. Prices declined from June 2014, resulting in decreasing fiscal and export revenues, as well as currency depreciations. Despite the drop in nominal exchange rates, currencies in the region have appreciated in real terms since June 2014, therefore reducing competitiveness and posing risks to the gradual revival of non-hydrocarbons export volumes. The reason behind the appreciation is the concomitant depreciation of the euro and the Russian rouble which drove MENA country Real Effective (i.e. trade-weighted) Exchange Rates (REERs) upwards, especially those currencies pegged to the US dollar. That includes Saudi Arabia and the United Arab Emirates, which both saw an annual increase in REERs of 8.1% in December 2014. The REERs in Bahrain and Iran, two other major oil exporters whose currencies are pegged to the dollar, increased by 5.5% and 11.2% respectively in November 2014. Algeria, on the other hand, has a free floating exchange rate system allowing its currency to depreciate and offsetting the real appreciation effect. By Petar Chavdarov in Bulgaria - CEIC Analyst Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. Back to Blog

2nd March 2015 Loss of Competitiveness in Oil-Exporting Countries

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