An excellent article from Javier Blas and Simon Kennedy at Bloomberg:
“For the last 75 years, almost every economic crisis has been preceded by an oil price spike. The worry now is that low energy prices are pushing the global economy into a tailspin.
While the idea is counter-intuitive, it’s gaining traction because a growing share of the world’s consumers and investors are in the very places getting hammered by the rout in commodities prices. Apple Inc., for example, blamed weaker sales last quarter on lower economic growth in some oil-rich countries.”
Some disagree:
“Some aren’t worried at all. The U.S. Federal Reserve Bank of Dallas, in a research paper released in January, said that a drop in oil prices brought about by rising supply — like the current one — should boost global growth by up to 0.4 percentage points. “This is mainly due to an increase in spending by oil-importing countries, which exceeds the decline in expenditure by oil exporters,” the paper said.
Indeed, the market is focusing on the short-term adjustments and ignoring the potential gains, according BlackRock Inc. Chief Executive Officer Laurence D. Fink.
“The reality is 4 billion human beings are going to have cheaper energy, cheaper heating, they’re going to have more disposable income,” Fink said last month. “And ultimately that’s going to re-accelerate the global economy. It may take six months, it may take a year but this is all good.””
And, finally:
“Whatever the amount, the IMF says the impact on investment in oil and gas new projects is “subtracting from global aggregate demand.””
But read the whole thing, there are some good charts too…
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