As oil prices continue to fall and remain volatile, there will always be winners and losers. UBS has looked at the repercussions for next year if crude remains at the current downcast level.
A UBS simulation of a “long-lasting” decrease in crude oil prices to $85 a barrel next year would signify a stimulus to global growth of 0.25 percentage point. We are not talking boom levels per se, but important especially when the global economy is in such a delicate state.
- Emerging markets as a whole would enjoy a increase to its growth rate of 0.5 percentage point;
- Russian GDP would fall by over 1 per cent; and
- Norway’s GDP would be reduced by 0.5 per cent.
Perhaps the most important impact would be on Europe. Continued oil prices at the current level would cut the eurozone’s inflation rate by 0.6 percentage point and thrust the common currency area into deflation, similar to what has been happening in Japan now for the past 15 years or so.