It is evident that although low oil prices could boost consumption its impact on growth could be mixed, with oil exporting countries particularly negatively impacted by these developments in the form of deteriorating fiscal and external balances.
This will furthermore result in a sharp decline in the flows into sovereign wealth funds and given the fiscal deficits could result in significant sell off by these funds. The lower oil prices may also accelerate the build-up of deflationary pressures and possibly result in stagflation becoming more entrenched in certain economies.