IMF’s Lagarde Says Oil Decline Good for World Economy

The drop in oil prices will provide a net boost to the global economy while posing risks for energy-producing nations including Russia, International Monetary Fund Managing Director Christine Lagarde said.

“On a net-net basis, it is probably good for the global economy,” Lagarde, speaking in Washington yesterday, said in her first comments on last month’s 18 percent decline in crude prices. For Russia, the drop is a “significant threat” that “is adding to their fragility and their vulnerability and they know it. It remains to be seen what the reaction will be.”

The remarks illustrate the benefits and dangers from surging U.S. oil production that’s reshaped the world’s geopolitical landscape amid a weaker-than-anticipated global recovery. A 30 percent decline in oil prices translates into an 0.8 percent boost in growth for “most advanced economies” and “probably 0.6 percent for the U.S.,” Lagarde said.

Bloomberg

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