PARAGRAPH COMPLETION :- Normally, falling oil prices would boost global…
PYQ Accenture 2024
PARAGRAPH COMPLETION :-
Normally, falling oil prices would boost global growth. This time, though, matters are less clear cut. The big economic question is whether lower prices reflect weak demand or have been caused by a surge in the supply of crude. If weak demand is the culprit, that is worrying: it suggests the oil price is a symptom of weakening growth. If the source of weakness is financial (debt overhangs and so on), then cheaper oil may not boost growth all that much: consumers may simply use the gains to pay down their debts. Indeed, in some countries, cheaper oil may even make matters worse by increasing the risk of deflation.
- A.
An energy-induced drop in prices, though good for consumer purchasing power, risks reinforcing expectations of lower inflation overall; it is part of the threat’s pernicious nature that such expectations easily become self-fulfilling.
- B.
The International Energy Agency, an oil importers’ club, said it expects global demand to rise by just 700,000 barrels a day (b/d) this year, 200,000 b/d below its forecast only last month.
- C.
On balance, energy consumers win and energy producers and exporting countries lose with falling oil prices.
- D.
On the other hand, if plentiful supply is driving prices down, that is potentially better news: cheaper oil should eventually boost spending in the world’s biggest economies.
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