JEDDAH, 28 June 2006 — The trade surplus of oil exporters jumped to more than $450 billion in 2005, equivalent to more than half of total oil revenues. The primarily oil-exporting emerging economies, which accounted for the lion’s share of this increase, spent only about half of the rise in oil receipts on additional imports of goods and services, according to the 76th Annual Report of the Bank for International Settlements (BIS).
The comparable figure in 2003 and 2004, and on average during the previous oil shocks, had been about three quarters. Identifying and exploiting domestic investment opportunities in oil-exporting countries may take time — in fact, more time than effecting a real transfer of resources primarily through higher consumption expenditures, as was the case in the 1970s.
The way in which oil-exporting countries spend their receipts could also have an impact on the effectiveness of external adjustment mechanisms.
European countries have probably been main beneficiaries of additional demand for imports in oil-exporting countries since 2003, the BIS report, which was released in Basel, Switzerland on Monday, said.
China has also succeeded in increasing its export share, while the United States has suffered a significant loss. However, the limited data available suggest that much of the increased surpluses of oil exporters continue to be invested in US securities, although there has been a significant diversification across asset classes.
However, global current account imbalances continued to widen in 2005. The external payment deficit of the United States reached $800 billion in 2005, or 6.5 percent of gross domestic product (GDP), an increase of almost $140 billion within one year. While the euro area recorded broadly neutral external payments, the current account positions of individual member countries widened sharply: Germany’s surplus rose to more than $110 billion (4 percent of GDP) at the same time as Spain’s deficit jumped to almost $85 billion (7.5 percent of GDP). The Japanese surplus remained large, at about $170 billion or 3.5 percent of GDP. Several smaller European economies, such as Norway and Switzerland, also ran large surpluses. Higher energy prices were again a key factor explaining widening external imbalances in 2005. The BIS report added that the oil trade balance of advanced oil-importing countries deteriorated in the order of 1.5 percent of their GDP. In the case of the United States, net energy imports increased by $70 billion last year, almost the same amount as the total increase in merchandise exports; energy now accounts for one third of the US trade deficit.
Higher energy prices also led to a major shift in the composition of external surpluses. The collective surplus of oil-exporting countries grew to about $420 billion in 2005, compared to less than $90 billion in 2002 before oil prices had started to rise. High oil prices had an even stronger impact on oil-importing emerging economies, which typically have a higher oil intensity of output. For instance, China’s oil trade balance deteriorated by 4 percent of GDP between 2002 and 2005. Even so, the aggregate current account surplus of oil importing emerging economies continued to expand, reaching $170 billion in 2005, compared with about $90 billion in 2002. China’s external payments surplus jumped to $160 billion (7 percent of GDP) on the back of unabated export growth and a marked slowdown in import growth. Latin America as a whole also recorded a growing surplus as a number of countries benefited from both rising commodity prices and a higher volume of exports.
Oil-exporting countries apparently spent a smaller proportion of oil revenues on imports in 2005 than in the previous two years, and less than at the time of the previous oil shocks.
