The Impact of Oil Prices on the GDP of V4 Countries

Abstract

This study is concerned with forecasts of GDP growth for the Visegrad countries (V4-hereafter) and oil prices simultaneously. The series for GDP and Oil prices are quarterly, covering the period from December 1, 2000, to October 1, 2023. Neural network techniques were performed to generate individual forecasts. The forecasts for oil prices maintain higher accuracy than the GDP ones due to autoregressive lags. In other words, current oil prices absorb significant influence from past prices. The GDP forecasts for the V4 group indicate tremendous shock and moving growth to a lower steady state. The lower growth observed by the end of the period under review can be attributed to two subsequent non-economic shocks: the Russia-Ukraine war and the COVID-19 pandemic. The V4 countries faced difficulties after the outbreak of COVID-19, mainly due to the stringency measures. In addition to accelerating inflation, the war also disrupted energy commodities within supply chains. These and other facts justify the low growth that awaits these countries until 2028. Ultimately, the oil price until 2028 is estimated to oscillate between $60 and $90 per barrel.