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Let the good times flow – GS

FXStreet (Barcelona) - The Research Team at Goldman Sachs discuss about the positive side of a commodity price shock and highlight that the EM importers benefit the most in this Oil decline fiasco.

Key Quotes

“While markets initially appeared to view this year’s sharp decline in oil and commodity prices as a reflection of global growth weakness, more recently the positive impact of such a shift has become a bigger part of the discussion."

"Indeed, the cyclical and structural backdrop for energy in particular seems to be one of over-supply – a broadly favourable growth dynamic, albeit one with ‘redistributive’ potential.”

“Globally, we find that a 20% decrease in oil prices is worth about 45bp to real GDP growth, with EM importers as the biggest beneficiaries, followed by DM importers and even DM exporters, while real GDP growth for EM exporters declines. Inflation tends to decline generally. And current account adjustments are largest and negative for EM exporters, with some modest improvement for EM importers.”

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