gvA Update

The incredibly sharp drop in oil prices since the second half of 2014 has taken many analysts by surprise, especially considering the scale and swiftness in the decline. As discussed in the IMF and World Bank seminar debate, the severe and swift decline in oil and other commodity prices has had varying impacts and extensive implications for oil importers, exporters, consumers and governments. The highly variable effects of the oil-price drop have created some winners and losers. Some economies that have been hit the hardest appear to be some of the biggest oil exporters such as Russia and OPEC countries, which are heavily reliant on oil revenues to fund their government expenditures, including social programs and transfers. At the industry level, energy-mining companies and affiliated industries have also been very adversely impacted. Even so, many fuel-importing countries such as Japan, China and India have experienced significant cost savings as a result of much lower import bills, causing households to feel a sense of improvement in what their disposable incomes can buy. In addition, businesses, especially those in the export sector in these countries have gained more traction in their competitiveness. . More broadly speaking, lower oil prices will feed into already softening global inflationary pressures, allowing more scope to keep policy settings accommodative, ensuring any recovery in activity to can gain even more traction. Therefore, sustained low oil prices are expected to provide a boost to global activity in the medium term, However, for commodity exporters, the warning can't be any louder. Ensure your communities are economically stronger so that you can diversify your economy and quickly please. I am Magnus Kpakol and that's my view.


Posted: Nov 23rd, 2015 @ 09:53:31 AM