“Oil-price drop is one of the most important developments shaping the global outlook” – Janet Yellen, The chair of the Federal Reserve
Oil prices have fallen significantly since the mid of 2014, and this is having a marked influence on the global economy . This startling price shift has already led to some wide-ranging market adjustments, while the longer-term implications of the move have left much for investors to digest.
The fall in oil prices was brought on primarily by a supply-side glut, pushed by shale finds in North America, the return of previously disrupted production in Africa and the Middle East, as well as a weaker global-demand backdrop.
The adjustment in oil prices has already led to some cutbacks in supply but, even so, there is a growing realisation that this oil move could be longer lived.
So what are the implications?
- Given that a number of the world’s largest economies are net oil importers, does the move in the price of ‘black gold’ provide growth impetus for these markets?
- Could it also push some regions into a deationary spiral?
- Furthermore, does the opportunity afforded by the falling price give governments a means to avoid implementing structural reforms, as they rest on the cushion of an unexpected budgetary windfall?
In this paper, a panel of specialists from BNP Paribas will discuss what lower oil prices mean for both developed and emerging economies, and whether the revaluation and re-evaluation of energy inputs may help or hinder these economies.
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