Oil price great for some, but does it tell us global growth has been poor

Pendal Group

Pendal Group

Oil price great for some, but does it tell us global growth has been poor? Falling oil prices are good for consumers (unless you are poor and hence don't drive!) but not for LNG producers, and possibly also coal producers. Around the world, oil consumers should gain and oil producers lose. Oil prices may already have hit bottom. Previous sharp falls have usually been followed by significant rises. After the last six troughs, oil prices have risen by an average of 80% over the following twelve months. $70 oil later this year is not out of the question! Declines in oil prices, all other things being equal, are good for global growth, so why the equivocation? Because the rapidity of the decline (more than 60% in the past seven months) is taken as a sign that something else is wrong. Oil prices are considered to be like a canary in a coal mine; their fall is a sign that global growth must be deteriorating rapidly. What's in store for growth across the world? More from BTFG's Chief Economist Chris Caton here (VIEW LINK)

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