Energy sector to drive global economy to recovery – WEF

A new World Economic Forum (WEF) report has predicted that the energy sector will drive the global economy to recovery.

The energy sector has a major role to play in global economic growth and recovery, with its indirect contributions outweighing the already considerable direct effects, according to the report launched March 7, 2012.

The report, ‘Energy for Economic Growth – Energy Vision Update 2012’, highlighted the energy sector as engine of global economic growth with its high “employment multiplier effects”, but cautions against seeing additional energy sector jobs as a universal remedy.

It examines the role of energy prices in the economy. “Lower prices reduce input costs for nearly all goods and services, thus making them more affordable,” the report said.

The WEF observes that many countries such as China, India and South Korea are increasingly focusing on renewable energy sources, including wind and solar, as potential growth sectors for their economies.

However, the higher costs of these technologies create trade-offs that must be considered, the report says.

“We always suspected that energy had a vital role to play in the economic recovery,” said Roberto Bocca, Senior Director, Head of Energy Industries at WEF.

The oil and gas industry in the US, for example, contributed 37,000 direct jobs in 2011, the Davos-based Forum indicated. “This drove the creation of an additional 111,000 indirect jobs during the same period, giving an employment multiplier effect of three. These 150,000 jobs represent 9% of all jobs created in the United States in 2011,” it added.

“But”, Roberto Bocca says “we were still surprised when the data uncovered the magnitude of the sector’s multiplier effects.”

The energy industry is unique in its economic importance and has the potential to be a tremendous catalyst for job creation and sustainable growth without harming the sector’s overall performance,” said IHS CERA Chairman Daniel Yergin.

By Ekow Quandzie