The dramatic 55% fall in crude oil prices in the past year has brought clear benefits to oil importing nations, which include the US and most of the European Union (bar Norway) and Asia (bar Malaysia). Governments have been able to cut oil subsidies (e.g India, Indonesia and Egypt) and alleviate fiscal pressure, energy-intensive manufacturers’ input costs have shrunk and consumers are enjoying a tandem fall in petrol pump prices and heating bills.
But there’s a tendency to over-emphasise the direct boost from lower oil prices to global and country-specific consumer spending and growth. Falling oil prices are not the panacea to structural and cyclical deficiencies in global growth – a point that IMF Managing Director Lagarde eloquently made yesterday (Three “Rosetta Moments” for the Global Economy in 2015).
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