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Video: John Lorie of Atradius on influence of oil & gas prices on global economy

by Martin Menachery on Jul 6, 2017


John Lorie, chief economist, Atradius.
John Lorie, chief economist, Atradius.

The oil and gas sector is very important for the global economy.

In terms of country risk, it is a major factor as many national economies are overly reliant on these commodity exports for government revenues. The volatility in the market can have negative implications on government spending and overall solvency of countries.

The oil and gas sector is also one of the main drivers of global investment; so, as lower prices weigh on the profitability outlook of major products, global investment declines as well, weighing on global trade and economic growth.

On the other side, since spending on energy is a large portion of people’s regular spending patterns, lower prices also boost purchasing power of consumers, which can stimulate the global economy.

Following the latest bout of low oil and gas prices, the negative effects on many emerging market economies and global trade have clearly outweighed the boosts that higher private consumption has offered. But what we have seen is clearly a relatively short-term effect. In the long run, if resources are available at lower cost, it seems unlikely the benefits will not outweigh the cost.

Check out the following video to know the influence of oil and gas prices on global economy as explained by John Lorie, chief economist, Atradius.

 


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