WASHINTON
Declininig oil prices will help boost global economy, International Monetary Fund Managing Director Christine Lagarde Monday said on Monday.
"It is good news for the global economy,” she said speaking at the annual meeting of The Wall Street Journal CEO Council in Washington.
A reduction in the price of oil of more than 30 percent would contribute about 0.8 percent growth to developed countries in the upcoming quarter, Lagarde said.
But Lagarde warned that the decline in oil prices would particularly hurt the Russian economy which is dependent on oil exports.
Russia is well aware of the risk, she said, but it is not clear how Russia will respond.
According to Lagarde Iran, Venezuela, and some other African countries, all of which depend on oil exports, would also be hit by the oil-prices decline. .
Some Organization of Petroleum Exporter Countries members may see a wider budget deficit if the decline in oil prices continues, she noted.
U.S. economy to grow by 3.5% in 2015
Lagard said that lower energy prices would accelerate economic growth in the U.S. by 3.5 percent next year, a forecast that has been revised up from 3.1 percent.
On the other hand, she said, the rest of the world, particularly Europe, would see a "new mediocre" as these economies would be marked by slow growth, low inflation and high unemployment.
According to Lagarde, the European Union is also expected to benefit from lower oil prices, as well as from the declinine of the euro, and from the increasing strength of the financial sector.
But at the same time, she maintained that slow-moving political leaders need to adopt more job-friendly labor market reforms, to initiate a more aggressive and innovative monetary policy, and to move ahead with other structural reforms.
“Where they are at the moment they need to use all available tools. They have to get on with it and do it,” Lagarde said
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