Cheap oil to 'help economy'

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Cheap oil to help economy

The plunge in oil prices has unnerved financial markets in recent weeks as investors worry it means the global economy is weakening and requiring less energy.


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Published: Thu 21 Jan 2016, 11:00 PM

Last updated: Fri 22 Jan 2016, 7:49 AM

Davos: US Treasury chief Jack Lew said the beneficial effect of lower oil prices on consumers may not yet be fully apparent.
The plunge in oil prices has unnerved financial markets in recent weeks as investors worry it means the global economy is weakening and requiring less energy.
But in a panel in Davos, Switzerland, Lew stressed how the drop in oil prices acts like a tax cut for the majority of people and countries, which are net oil consumers.
He said consumers "have more money in their pockets" and that people are either spending or improving their household finances by saving or reducing debt. In either case, he said, that strengthens the economy in the longer term.
"I don't think that money is just evaporating," he said.
Meanwhile, a Chinese market regulator said the country has no option but to support growth this year, using its large financial reserves if needed.
As concerns over a slowdown in the world's second-largest economy roil markets, Fang Xinghai, from China's Central Leading Group for Financial and Economic Affairs, said on Thursday: "We cannot afford to let growth rate to fall too sharply, because that would ignite a lot of financial problems inside China. So we will have appropriately expansionary fiscal and financial policy this year."
At a panel, Ray Dalio, the chairman of Bridgewater Associates, said the biggest concern was China's currency. As it weakens, that will weigh on the global economy.
He said: "That happens at a time there is a weakness in the rest of the world."
In a speech at the forum, Cameron said that his aim is to "secure the future of Britain in a reformed European Union."
He said that if a deal does not emerge at a February summit of EU leaders then he can wait. His party's manifesto pledge was to hold a referendum by the end of 2017. If offered a good deal at the summit, Cameron said he would take it.
Cameron laid out his four reform proposals. He wants changes to rules affecting migration and benefits; to "hard-wire" competitiveness into the EU's DNA; to make sure non-euro countries like Britain aren't discriminated by the 19 EU countries that use the euro currency; and to get Britain out of the idea of an "ever-closer union."
European leaders said they will do what they can to make sure British Prime Minister can support his country's continued future in the European Union in a referendum expected this year.
Mark Rutte, the Dutch Prime minister whose country currently holds the rotating presidency of the 28-country EU, said Thursday he's "fairly optimistic" a deal with Britain will emerge in February, but that he's "not absolutely sure."
Pakistani Prime Minister Nawaz Sharif said his country is increasingly determined to fight extremism after a university attack by militants that killed 21.
Sharif, speaking in Davos, said, the country's resolve to fight against these elements is "getting stronger every day."
He said the attack was the result of "blowback" after Pakistani authorities' efforts to dismantle extremists' infrastructure and hide-outs.
Even as his country mourned the students killed at Bacha Khan university in the town of Charsadda, Sharif insisted that the extremists' "ability to strike back has been considerably destroyed." The terrorists are "on the run," he insisted.

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