by Hera Hoi – EM TV Online
According to the Managing Director of the International Monetary Fund, Christine Lagarde, the falling oil prices is a good thing for the global economy as it will “boost the global economy in the US and across the globe.”
Lagarde made this remark during the Wall Street Journal CEO council annual meeting in Washington.
As for Papua New Guinea, now at the tip of the energy boom driven by the $19 billion LNG Oil and Gas project and forecasted by The Economist to be 2015’s fastest- growing economy, the question of whether the country will suffer with the rest of the oil producing nations is hard to say.
While experts’ forecast global oil prices to stabilise by next year, Prime Minister, Peter O’Neill is confident the country will ‘ride out the energy slump.’
As for gasoline buyers in the country, who are supposed to prosper in lower gasoline prices, the fall is yet to hit our Inter Oil and Mobil gasoline stations.
Highlighting key areas for the global economic forecast, Managing Director of the International Monetary Fund, Christine Lagarde, responded to the substantial decrease in world oil prices, last week, following the OPEC members rejecting to control the oil supply that would further stabilise the global oil prices.
The oil cartel’s decision – refusing to cut production from 30 million barrels a day, has sent oil traders and analysts running to find a new trading floor.
“The message from OPEC was fairly clear – we are not hurting yet because we are the lowest cost producers,” said Lain Armstrong, oil and gas analyst at wealth management firm Brewin Dolphin in London.
Even the poorer member countries like Venezuela called on OPEC to reduce production quotas.
While the slump may ‘squeeze’ the energy companies, and oil producing nations like Russia and Veneuzela, Lagarde says consumers will be on the winning side paying less for gasoline.
Lagarde said, for the US, the lower energy prices will help accelerate economic growth to a 3.5 % pace in 2015 which is an increase from October’s forecast of 3.1%.
Europe is also expected to benefit from lower oil prices, though the Eurozone also faces the risk of “new mediocre”, says Ms Lagarde as she was describing an economy marked by slow growth, low inflation and high unemployment.
Lagarde also suggested that Japan be tasked for a slow implementation of fiscal and labor reforms. She stated that a significant area for Japan was to open have the labour force for women and immigrants opened up.
“There is no slack in the Japanese economy, so when they do stimulus, when they put money into the construction business for instance, there is nobody to build.”
She clarified there is always winners and losers in the falling prices of oil.
“Exporters are taking a hit.
“An oil producing economy like Russia is suffering from lower prices and it is adding to their fragility and their vulnerability,” Lagarde added.