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Cheaper oil has limited impact on lifting Chinese economy: Moody's

(Xinhua) Updated: 2015-02-12 10:30

BEIJING - Cheaper oil will not stop the gradual and ongoing Chinese economic slowdown, and global economic growth is held back by uncertainties in several key economies, said Moody's Investors Service.

"Higher energy taxes and government-controlled prices in some energy and transportation sectors will dampen the impact of lower oil prices," the company said in a report released on Wednesday.

"Lower oil prices will give the US economy a boost in the next two years, but will fail to lift global growth as headwinds from the euro area, China, Brazil and Japan hold back economic activity," noted the report.

"Lower oil prices should, in principle, give a significant boost to global growth. However, a range of factors will offset the windfall income gains from cheaper energy," said Marie Diron, Moody's senior vice president and author of the report.

Moody's forecast that China's economic growth would ease pace to below 7 percent in 2015 from 7.4 percent in 2014.

The report highlights multiple factors that could lead to lower growth in certain countries, but emphasizes that few of these risks would, on their own, have a large global impact. These include a disorderly financial market response to US monetary policy tightening, a longer than forecast fall in China's property market and heightened political uncertainty and deflation or prolonged low inflation in the euro area.

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