Low oil prices will help mitigate twin deficit problem: S&P

Wednesday, Mar 16, 2016,10:43 IST By metrovaartha A A A

New Delhi | Continued low oil prices will boost spending in India and help mitigate fiscal and current account deficits, says a report by Standard & Poor’s. India still leads the pack in terms of Asia Pacific GDP growth, but 2016 is shaping up as a year of reckoning on the policy front, according to the report.

Continued low oil prices boost spending in India more than elsewhere, and help mitigate the twin fiscal and current account deficits, S&P Ratings Service said. The sluggish global demand will prolong the pain for exporters, it said, adding that the recent budget emphasised prudence over growth, and focused on the rural economy. In its ‘Economic Snapshots For APAC’, S&P said uncertainty about China’s exchange rate regime and growth momentum has subsided, giving investors a clearer picture of the underlying macroeconomic landscape in Asia-Pacific.

Markets have concluded that the Chinese sky is not falling and the Bank of China will act to keep the exchange market harmonious and broadly stable, it added. S&P further said Japan might see a downward revision in first quarter growth forecast, while Australia will get a boost.