Oil price decline is not enough to accelerate economy – News Minute to

Oil price decline is not enough to accelerate economy – News Minute to

The decline in oil prices is to give a boost to consumer and business to spend more money and make new investments, but not enough to increase the growth forecasts for the world economy, says Bloomberg.

According to the financial news agency, the degradation from the perspective of evolution of emerging economies such as China, Russia and Brazil, along with geopolitical risks as the possible area of ​​Greece output euro, are offset the benefits of lower energy costs.

The interpretation is based on the average estimate that economists regularly contacted by one of the largest financial intelligence agencies do, and anticipating for this year an increase of 3.5%, unchanged from October.

“People are cautious because they see other risks pulling to the downside,” summed chief economist at JPMorgan Chase, Bruce Kasman, adding that ” there is still a big question mark “in the world.

The reluctance of economists to raise forecasts for growth of the world economy proves the weakness of economic expansion after four years in a row when the world eventually grow below of expectations

The 55% reduction in oil prices since June, the deepest decline since the global financial crisis, boosted assets considered more robust, as the US debt securities, but had effects negative in the currencies of exporting countries, such as Russia, and made the index that measures all international exchanges (the MSCI All-Country World Index) dropped 3.6% since June.

The International Monetary Fund estimates that the decline in oil prices could increase world production from 0.2 to 0.7% this year through higher disposable income and the decrease in raw material costs for businesses, according to a message posted on the Internet in December by the chief economist, Olivier Blanchard, and the leader of the research department in ‘commodities’.

The message on the blog of the International Monetary Fund (IMF), however, can not be read as an improvement in the growth forecast of the world economy, which remains unchanged since October: 3.8%, which is already a downward revision from the estimate of 4% in July

Still. this month, the IMF will release the update of the World Economic Perpetivas (World Economic Outlook).