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Editor’s blogJanuary 14 2015

Falling oil prices are a slippery slope

While consumers are celebrating the recent fall in oil prices, the political and economic ramifications are threatening to destabilise a number of oil-producing economies.
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Sudden market movements are destabilising even if in the medium term they are in the right direction. For this reason, there have to be concerns as well as plaudits over a 50% drop in oil prices.

Of course, lower energy prices are positive for both growth and government budgets in oil-consuming countries. A 10% fall in the oil price may translate into about a 0.1% growth increase in Europe, while countries such as India and Indonesia are using this as an opportunity to reduce the fuel subsidies that hammer their budgets.

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