By Andrew Swiston, based on a forthcoming IMF Working Paper with Francesco Grigoli and Alexander Herman, with research assistance from Adrian Robles.
This includes countries in which oil exports in 2013 exceeded 8 percent of GDP, but excludes South Sudan and Yemen due to the armed conflict in these countries over this period, Iran and Iraq as their GDP growth performance was strongly affected by increases in oil production not projected as of 2014, and Libya and Syria due to data gaps. Real GDP was used as the variable of interest as there are a number of transmission channels from oil prices to economic activity in oil exporters, and real GDP forecasts are widely available.
A negative value indicates a higher impact of the shock, that is, that growth was lower than projected. Oil prices hit a trough in annual average terms in 2016. In addition, the shock would be expected to affect the rest of the economy with a lag. For that reason, the focus is on the cumulative impact through 2016, though the results hold when the impact through 2015 is considered.
While other factors affected growth in these countries over this period, the oil price was the most significant external factor to change between 2014 and 2016. The fact that growth underperformed forecasts in most countries—in many cases by a wide margin—suggests this shock played a substantial role.
A portion of the decline in Nigeria’s oil exports is explained by lower oil production due to an increase in sabotage of oil infrastructure.
In 2013, oil accounted for over 95 percent of exports and three-quarters of government revenue, though oil GDP was less than 13 percent of overall GDP.
The nature of the identification strategy precluded a panel approach, as there were no other large oil price declines in the last two decades featuring such a sizable permanent component, as gauged by movements in oil futures contract prices.
Exchange rate regime flexibility is measured using the assessment of the de facto regime in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER). The specification shown in Table 1 assigns a value of positive one to floating regimes, negative one to stabilized arrangements, conventional pegs, currency boards, and officially-dollarized regimes, and zero to others. A variable using the scale of one to ten used in the AREAER yielded similar results.
Lack of data availability on maturing external obligations prevented using indicators on short-term external liabilities coming due.
For all countries, the reserve adequacy metric was calculated using total external debt liabilities since data on the maturity profile of external obligations was not universally available. The ratio of reserves to imports was statistically significant in place of the reserve adequacy metric.
The group of all oil exporters includes those countries exporting more than 50 thousand barrels per day.
The impact on non-oil real GDP relative to pre-shock forecasts was not assessed, as several countries did not have forecasts available for the non-oil sector.
These were gross debt, the overall fiscal balance, the primary balance, and interest expenditure (whether as a ratio to GDP or revenue). No combinations of these variables were significant, with multicollinearity between them, as well as the limited degrees of freedom, likely playing a role.
Other Sub-Saharan African oil exporters are Angola, Cameroon, Chad, Equatorial Guinea, Gabon, and Republic of Congo. Countries with managed floats in 2013 were Algeria, Kazakhstan, Malaysia, and Russia.