IMPACT OF OIL PRICES TOWARD MACROECONOMIC INDICATORS OF OPEC COUNTRIES

Abstract

The world has witnessed that oil price volatility seems to play major role in the global economy. This study tends to identify the impact of oil prices on macroeconomic indicators of OPEC countries reflecting upon 15 years from 2000 to 2015 respectively. The study purpose to fulfil gap those previous and existing studies which did not fulfilled especially regarding major oil productors among OPEC countries. Meanwhile, study aimed to find out and understand effect of falling oil prices on the economy of OPEC countries and offered solution which helped in avoiding negative impact. This study focused on three major macroeconomic indicators such as GDP, current account balance (% GDP) and inflation. The ordinary least square regression was used to determine the relationship between indicator and oil prices on 7 OPEC countries which included Kingdom of Saudi Arabia, Venezuela, Kuwait, Nigeria, Iraq, Angola and Ecuador. The result showed a weak relationship between oil prices and GDP of 7 OPEC countries which their current account balance showed high sensitivity toward oil prices among Arab countries from non-Arab countries. In additions, the inflation showed sensitivity in some selected OPEC countries.