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The current oil boom, which started in 2006, is different from the previous two booms in 1974 and 1981, despite the similarities between them.
There are many positive developments, and other events which were caused by global events and crises and left their impact on the economies of countries all over the world, whether they were oil exporting or importing.
The first of these developments is that the current oil boom, unlike the other two, came in view of budget deficits in oil countries and a rise in public debt, which exceeded the safe level of 60 per cent of the Gross Domestic Product (GDP) and reached more than 100 per cent in some GCC countries.
The current boom ended the 10-year annual budget deficit and reduced public debt to less than 20 per cent of the GDP.
This shift in oil incomes opened wide horizons for extremely important financial changes, especially for GCC countries, which are planning to launch their single currency by 2010.
Without such a huge rise in oil prices, it would not have been possible for GCC countries to abide by the standards required for launching the single currency, which is the second most important development that resulted from the third oil boom.
In line with known standards, it is now possible for all GCC countries, including Oman, to meet the requirements for launching the single currency, which will have many major positive impacts on all GCC economies.
Therefore, the third boom laid the perfect ground for the issuance of the GCC single currency on time and for taking advantage of the comparable financial conditions in GCC countries, which had never been this close before.
The third development lies with the significant rise of the six sovereign funds in GCC countries, which have inflated due to the oil boom.
These developments give GCC economies more flexibility to cope with the fluctuations in global oil markets.
High growth
The fourth development is related to the unprecedented growth rates in the economies of oil countries, which exceeded 20 per cent in some of them, as a result of the constantly soaring oil prices, as well as the continuous growth in non-oil sectors, such as the property and financial sectors.
The high inflation rates all over the world are the fifth development that coincided with the third oil boom.
During the former two booms, inflation rates increased only in oil-importing countries, while the inflation accompanying the current oil boom has not excluded anyone, which reduced the benefits resulting from the increasing oil prices.
The inflation rates, which exceeded 15 per cent in some oil countries, according to official sources, were never known before in these countries, whose inflation rates never exceeded 5 per cent in the past three decades.
Besides the foreign factors that contributed to increasing inflation rates during the previous two booms, the high growth rates during the third boom generated domestic inflation factors as a result of increasing demand for various commodities and services.
The general outcome of the current boom is positive, just like the previous two, especially that the domestic factors that contributed to increasing inflation rates will soon be stabilised, which will result in regaining the balance between supply and demand in the markets of oil producing countries.
Dr Mohammad Al Asoomi is a UAE economic expert.
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