As for economic activity, global growth has kept powering ahead. Non-oil producing Emerging European countries have generally conformed to this trend, while oil producing countries in the region, notably Russia, have greatly benefited from the rise in crude prices. Granted, due to adjustment lags, the rise in oil prices has not exhausted all its effects witness the ongoing rise in core inflation rates in most countries. Furthermore, our oil team is looking for stability in oil prices in the remainder of the year and then only a small decline in 2001. But, the increased discipline within OPEC and the capacity constraints that are likely to emerge if world demand keeps growing in the next two years, both suggest that further upward spikes in oil prices are entirely possible.
Structural changes explain the resilience to higher oil prices .
While comparisons with those periods are quite difficult in Emerging Europe, especially for transition economies, the key reasons we see for the resilience shown during the current oil shock are quite similar to the ones that apply to the main industrialised economies. Reduced energy intensity of GDP . WTI and Brent overestimate the rise in energy prices . In addition, the prices of energy sources other than oil, for instance natural gas, have risen significantly less since the beginning of last year. Large tax wedge on energy products .