World economic growth may slow by 1 per cent in 2006 versus previous forecasts if oil prices stay at recent highs of $70 a barrel for a sustained period, ratings agency Fitch said today.
The agency said recent GDP growth in the G7 nations had been buttressed by earlier macroeconomic policy easing but this was now changing, just as the drag from high oil prices starts kicking in.
"At $70 per barrel the oil price shock would be on a scale equivalent in real terms to those seen in 1974 and 1979," Fitch said in a statement.
"If oil prices stay high the headwinds facing global economic growth would gain strength while the scope for renewed macro economic policy accommodation would be limited," Brian Coulton of Fitch's Sovereign Group said.