4 Dec 2014

Oil prices down; GDP up - Credit Suisse

1:59 pm on 4 December 2014

Analysts at Credit Suisse say the falling price of oil could push up global growth by almost 1 percent.

US crude and Brent have fallen for five months in a row; oil's longest losing streak since the 2008 financial crisis.

According to Credit Suisse, oil prices in US dollar terms have plummeted by 38 percent since mid- June.

It said that going by OECD and IMF modelling, 10 percent off the oil price adds about 0.1 to 0.2 percent to the GDP.

Credit Suisse said if that was the case, the magnitude of the fall in the oil price should bump up GDP to between 0.4 and 0.8 percent.

The financial services firm noted that lower oil prices acted as an implicit tax cut for consumers, which boosted their disposable income.

It said in the United States alone, economists were predicting a drop in the oil price could be the equivalent of a $US110 billion tax cut for consumers there.

Credit Suisse said in the medium-term, falling oil prices were inflationary rather than deflationary.

At lunchtime today, the price of Brent crude was $69 and 92 cents a barrel.

Get the RNZ app

for ad-free news and current affairs