Moody’s says lower oil prices won’t boost global growth in the next two years

Amid a death spiral for oil prices, a comfort in some corners has been the belief that lower energy prices will be a boon for global growth. Тhe pain of lower oil prices won’t result in any boost to global growth over the next two years, due to headwinds from the euro area, China, Japan and Russia. The only beneficiaries? The U.S. and India.

Moody’s said, lower oil prices will give a lift to U.S. consumer and corporate spending over the next two years. The ratings service lifted its U.S. forecast for 2015 growth in gross domestic product to 3.2%, from 3% in its last quarterly report. For 2016, it should stay strong at 2.8%, said Moody’s. But for the Group of 20 countries as a whole, Moody’s expects growth of just under 3% for 2015 and 2016. That’s based on the assumption that Brent crude prices will average $55 a barrel this year, and rise to $65 in 2016. Moody’s expects oil prices will stick to current levels in 2015, because demand and supply issues won’t dramatically change in the near term.

Where oil isn’t going to help much is in the eurozone. Moody’s is forecasting its GDP to increase just under 1% in 2015 — not much change from 2014 — and 1.3% in 2016. “In the euro area, the fall in oil prices takes place in an unfavorable economic climate, with high unemployment, low or negative inflation, and resurgent political uncertainty in some countries,” said Marie Diron, a Moody’s senior vice president.

As for the major oil-producing countries, Moody’s said expect a sharp recession in Russia that will stretch out to 2017, though Saudi Arabia will be able to cope with lower oil prices as it can maintain higher fiscal spending.