China economic slump could slash oil price ‘by half’
A ‘hard landing’ of the Chinese economy could hit Middle East GDPs by up to 1 percent, warns IHS
A ‘hard landing’ of the Chinese economy could see the oil price plummet to as low as $50, information firm IHS has warned.
Growth in the world’s second-largest economy is stumbling, and if the rate of expansion continues to fall the repercussions would be felt globally, IHS said.
Such a scenario could see the gross domestic product of Middle East countries drop by up to 1 percent, IHS said.
“A China hard landing would mean the Middle East would experience weaker exports, lower tourism and business activity, and probably a resurgence of risk aversion by global companies due to this new deterioration of the global economic situation, just at the moment when they thought the situation was finally improving,” said IHS Chief Economist Nariman Behravesh.
“In an even weaker growth scenario than we’ve outlined, if China’s economy slowed to 3-4 percent, then oil prices might fall to perhaps USD $50-60 per barrel,” he added.
The oil price is currently hovering around the $100 mark. IHS executives said any drop to $50 would be both a temporary and extreme scenario.