Falling Oil Prices – But it’s not all good.

Lower oil prices will fail to give a “significant boost” to global growth in the next two years, Is the news from ratings agency Moody’s today. They warn that any boost from cheaper oil prices would be offset by the eurozone’s economic troubles, along with slower economic growth from the likes of China. Moody’s will therefore not be revising its growth forecasts for the G20 countries. They said; “For the G20 economies, we expect GDP growth of just under 3% each year in 2015 and 2016.” This figure remains unchanged from 2014 and from the previous forecast. They did speculate on a slight boost on the horizon for the Eurozone as a result of quantaitive easing from the European Central Bank having a weakening the Euro, but said: “Weak demand in the euro area suggests that companies will have to pass on the lower energy costs, limiting the potential for higher profit margins.” It’s not bad news for everyone though; the USA are set to see benefits from the falling price of oil due to “higher consumer and corporate spending”. Moody’s global growth outlook is based on the assumption that Brent oil prices will average $55 (£37) a barrel in 2015. This news comes at the same as the PwC reports that many UK oil and gas firms will need to change the way they operate in light of the fall in oil prices. Brian Campbell, co-author of PwC’s report, said: “With economists predicting low oil prices throughout 2015, UK oil and gas firms are not out of the woods by any means. “They are still at risk of an economic triple-whammy. The stark reality is that firms need to be able to operate in an environment where oil averages at $50 per barrel – only then can it be truly fit for the future.” Is this a move in the right direction? Can we take positives from the fall in the cost of oil? One would say hopefully, however we have to look back to Europe as the affect from the Eurozone crisis rolls on, the world economy looks to take the rough with the smooth.

For more information on Falling Oil Prices – But it’s not all good. talk to Guardian Wealth Management