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0УДК: 339.5
CORRELATION OF OIL REVENUES WITH MACROECONOMIC STABILITY
F.K. Nigmanova, student
Financial University under the Government of the Russian Federation
E-mail: [email protected] Scientific supervisor: M. V. Zharikov, Doctor of Economics, PhD Financial University under the Government of the Russian Federation E-mail: [email protected]
Abstract. This study analyzes the correlation between oil revenues and macroeconomic stability. It studies how fluctuations in oil prices affect the country's economic resilience, including factors such as inflation rates, exchange rates and GDP growth. The purpose of the study is to identify how income dependence on the oil sector can affect the country and how the negative effects of oil price unrest on the economy can be mitigated and more sustainable fiscal policies should be developed. The results of this study may be important for decision-making by policymakers and economists in oil-producing countries seeking to improve macroeconomic stability in the face of fluctuating oil revenues.
Keywords: oil revenues, trade balance, economic diversification, fluctuations in oil prices, macroeconomic environment.
КОРРЕЛЯЦИЯ НЕФТЯНЫХ ДОХОДОВ С МАКРОЭКОНОМИЧЕСКОЙ СИТУАЦИЕЙ
Нигманова Ф.К., студент
Финансовый университет при правительстве Российской Федерации E-mail: [email protected] Научный руководитель: Жариков М.В., д.э.н., профессор Финансовый университет при правительстве Российской Федерации E-mail: [email protected]
Аннотация. Данное исследование анализирует корреляцию между доходами от продажи нефти и макроэкономической стабильностью. Оно изучает, как колебания цен на нефть влияют на экономическую устойчивость страны, включая такие факторы, как уровни инфляции, обменного курса и рост ВВП. Цель исследования заключается в выявлении того, как зависимость от доходов нефтяного сектора может повлиять на страну и как можно смягчить негативные эффекты волнений цен на нефть на экономику и разработать более устойчивые фискальные политики. Результаты этого исследования могут иметь важное значение для принятия решений политиков и экономистов в нефтедобывающих странах, стремящихся улучшить макроэкономическую стабильность в условиях колебания доходов от нефти.
Ключевые слова: нефтяные доходы, торговый баланс, диверсификация экономики, колебания цен на нефть, макроэкономическая среда.
Oil revenues play a key role in the global economy and have a significant impact on the macroeconomic environment. The economy's absorption capacity of oil revenues makes this resource one of the main elements for understanding economic processes in many countries.[1]/ In this essay, we will examine the relationship between oil revenues and the macroeconomic environment, analyze the factors influencing this correlation, and identify possible consequences for the economy.
The correlation between oil revenues and the macroeconomic environment implies the relationship between the volume and price of oil sales and key macroeconomic indicators such as GDP, inflation, budget deficit, trade balance, unemployment rate, investment and others [2]/ Signs of correlation can be both positive and negative, and understanding this
pattern is important for the development of economic policy.
The global oil market is extremely important for many countries, both producers and consumers. Thus, changes in oil prices directly affect export and import earnings, as well as the level of investment, consumer prices and, of course, overall economic activity [3]. In addition, geopolitical factors play an important role, in particular, conflicts in various regions containing significant oil reserves, which significantly affect the international oil market, and so far, the macroeconomic situation in the world.
Oil prices are subject to significant fluctuations due to various factors such as changes in supply and demand, geopolitical events, inflation, currency fluctuations, etc. These fluctuations have a direct impact on macroeconomic indicators. For instance, when prices for oil rise, it can lead to increased income for oil companies
and increased export earnings of oil exporting countries, which in turn stimulates economic growth and help to increase Gross Domestic Product. [4] However, high oil prices can also lead to inflation and destabilization of world markets, which has a negative impact on the economy.
Many countries dependent on oil exports have significant budget dependence on oil revenues. They use oil revenues to finance budget deficits and social safety net programs. Thus, falling oil prices or reduced exports can create significant problems for the fiscal system, which in turn affects macroeconomic indicators such as inflation, unemployment, and overall economic growth.
If oil revenues decline due to low oil prices or reduced exports, this could lead to lower revenues, higher budget deficits, higher unemployment and lower GDP.
This can cause difficulties in financing social protection programs, infrastructure projects and general economic development. The oil revenue crisis could also lead to currency devaluation and increased inflation, exacerbating economic problems [5].
In general, the correlation of oil revenues with the macroeconomic environment is extremely important for understanding economic processes. Ensuring the sustainability and diversity of the economy, as well as developing alternative sources of income, are important steps in preventing potential negative consequences associated with oil revenues.
Oil revenues play a key role in the trade balance of many oil-producing countries. It is important to understand that the balance of trade represents the difference between exports and imports of goods and services. For oil-producing countries, oil exports are often a major source of revenue, making them an important component of the trade balance [6].
High prices for oil and the volume of oil export contribute to a trade surplus and an increase in the country's gross income.
Given the economy's heavy reliance on oil revenues, fluctuations in oil prices and changes in oil exports can affect the trade balance, for example, a drop in oil prices or a drop in exports can affect the trade balance and, accordingly, the overall economic situation.
In light of this, economic diversification and diversity of income sources become critical to minimize the risks associated with dependence on oil
revenues. Industrial development, expansion of exports of goods and services, and investment in various economic sectors can help eliminate the negative effects of oil price fluctuations.
Overall, the role of oil revenues in a country's trade balance is very important and requires conscious management to ensure the sustainability and diversity of the economy [7].
Here are some measures that contributed to the reduction of savings on oil revenues:
1. Development of other sectors of the economy: Investments in economic diversification, sectors such as manufacturing, tourism, information technology, agriculture and other sectors not related to the increase of industry, can contribute to income diversification.
2. Tax system reform: creating a more sustainable and diverse tax system that distributes income fairly and promotes growth in other sectors of the economy.
3. Investment in infrastructure: Development of infrastructure (transport, energy, communications) can lead to the creation of new jobs and stimulate economic growth regardless of the oil market.
4. Human Capital Development: Investing in education, health, and scientific and technological innovation can stimulate economic growth and job creation in other sectors.
5. Export Development: Diversification of export products will help reduce dependence on oil and gas revenues [8].
These measures can help reduce the economy's dependence on oil revenues and make it more resilient to oil price fluctuations.
Forecasting the economic impact of a decrease or increase in oil revenues for 2024 depends on many factors, such as the global oil market, national economic policies, inflation, exchange rates and other macroeconomic indicators.
However, there are some possibilities to consider:
Decrease in revenues from the sale of oil:
- A decrease in oil revenues leads to a decrease in export revenues, which can lead to a decrease in gross state revenues.
- It could also reduce demand for labor and investment in the oil sector, which could negatively impact employment and investment in the economy.
- There may be a violation of the budget balance and an increase in the debt burden for the state.
Increase in oil revenues:
- Increased oil revenues could help increase export earnings and increase overall government revenue.
- It could also stimulate investment in the oil sector and labor demand, which could have a positive impact on employment and investment in the economy [9].
- Additional revenues can help balance the budget and reduce the debt burden for the state.
In both cases, government actions, market reactions and external factors will play a key role in how changes in oil revenues will affect the overall macroeconomy.
The correlation between oil revenues and the macroeconomic environment depends on several factors, such as the size of savings, export patterns and dependence on oil resources. Below are the main findings:
A significant dependence on oil revenues could make the economy more vulnerable to changes in world oil prices. Falling oil prices can lead to economic problems, deficits and worsening exchange rates.
In some countries, the economy is completely dependent on oil revenues, and if oil prices fall, these countries can risk major effects such as inflation, budget deficits, and rising unemployment.
However, in countries where the share of oil revenues is not so significant, changes in oil prices may have a limited impact on the macroeconomic environment.
Diversifying the economy and increasing the share of other industries can also reduce dependence on oil revenues and strengthen macroeconomic stability.
In general, although oil revenues could play tremendous role in the macroeconomic environment of a state, their impact depends on the level of dependence of the economy on oil resources and the diversification of industries.
There are several ways to increase the sustainability of the economy relative to oil revenues:
- Diversification of the economy: The development of other industries, such as manufacturing, tourism, information technology and others, reduces dependence on oil revenues and reduces the risk in the event of a fall in oil prices.
- Development of human capital: Investing in education, science and innovation, as well as developing a skilled workforce, helps create a more diverse and dynamic economy.
- Creation of reserves and investments: Formation of stabilization funds and investment of oil revenues
in various assets can ensure stability and long-term sustainability of the economy.
- Transparency and good governance: Developing transparency in the management of budgets and financial flows will help improve the use of oil revenues and make the economy less aware of oil prices [10].
- Infrastructure development: Investing in infrastructure and transport networks, as well as development of small sized and companies medium sized business, will enhance economic diversification and improve competitiveness.
These measures can help reduce the economy's dependence on oil revenues, increase its resilience to changes in oil prices and provide a more stable macroeconomic environment.
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