Goldman Sachs: Rising oil prices benefit GDP of oil-exporting countries but overall negative for emerging markets.

Goldman Sachs released a research report stating that the current situation is still unclear following the attacks launched by the United States and Israel against Iran on Saturday (28th). Depending on the scale and duration of the conflict, it is highly likely to have a significant direct economic impact on multiple countries in the Middle East. In terms of economic growth, Goldman Sachs states that as expected, the impact of oil price changes on oil-exporting and oil-importing countries differs significantly. Analysis shows that, under unchanged conditions, a 10% increase in oil prices would lead to an increase in the actual local GDP levels of exporting countries like Russia and Brazil by 0.5 to 1 percentage points over 2 to 3 years. For oil-importing countries such as Turkey, it would result in a maximum decrease of 0.8 percentage points in the actual GDP levels, with the most noticeable impact on growth usually appearing around two quarters later. Goldman Sachs also found that an increase in oil prices has a negative overall impact on emerging market economies. Although emerging economies are typically more dependent on commodity exports than developed economies, the proportion of commodity consumption in GDP is also higher, making them more vulnerable to the secondary effects of rising oil prices on global economic growth. The bank also believes that Turkey and Egypt have the highest trade risks among countries directly affected by the conflict. In addition to neighboring countries, India, Thailand, and Malaysia have relatively high export shares to affected economies. Despite Israel being a direct participant in the conflict and located at the center of the region, its trade risks with other economies in the region are actually limited. Regarding inflation, Goldman Sachs believes that the impact of oil price changes on inflation is relatively consistent across countries. A 10% increase in oil prices typically results in a 0.2 to 0.5 percentage point increase in the level of the Consumer Price Index (including second-round effects), with Hungary, Poland, Thailand, and Turkey being more significantly affected. Unlike the impact on growth, the majority of the impact on consumer prices tends to manifest relatively quickly (within a quarter). In terms of monetary policy, Goldman Sachs points out that while central banks in various countries generally focus more on core inflation rather than overall inflation, the ability of emerging market central banks to anticipate fuel price fluctuations is limited by two factors: the weight of fuel prices in the Consumer Price Index in emerging economies is typically higher than in developed economies; and the credibility of monetary policy formulation in emerging markets is generally lower, making the secondary impact of overall inflation on core inflation more significant. Meanwhile, due to other factors such as the strengthening of emerging market currencies and the impact of US tariffs on third countries, inflation in most emerging markets has been slowing down. Therefore, Goldman Sachs believes that the current rise in energy prices is a reason for emerging market policymakers to slow down or postpone the rate-cut cycle, rather than a clear shift towards a hawkish stance.