OECD SEES MODEST IMPACT OF RISING OIL PRICES

Paris, March 23- The Paris-based Organization for Economic Cooperation and Cooperation (OECD) said Tuesday rising energy prices would affect gross domestic product and inflation only modestly in the short term.

The organization released its forecast in a Policy Note titled "The Effects of Oil Price Hikes on Economic Activity and Inflation," after analyzing recent oil price volatility.

According to OECD data, oil prices (Brent) have risen by about 40 percent since December. Till mid-March, North African political unrest spreading to Libya, a major oil producer, had remarkably pushed international crude oil prices above 100 U.S. dollars per barrel.

However, with respect to the global macro-economy, "a 10 dollar increase in the price of oil could reduce activity in the OECD area in the second year after the shock by two tenths of a percentage point," the report projected after doing assessment with OECD Global Model.

"The price shock is expected to raise inflation by roughly two tenths of a percentage point in the first year and by another one-tenth in the second year," it said.

As a result, if the 25-dollar increase in oil price that has taken place since the Tunisian uprising were to be sustained, "activity could be reduced by about 0.5 percentage points in the OECD area by 2012, and inflation could rise by 0.75 percentage points," the report said.

The advanced countries' advisory agency said it had no big concerns for inflation and economic growth in the near future for OECD countries, and did not see an urgent need to adjust monetary policies to counter the price hike.

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