WASHINGTON: Inter­na­tional Monetary Fund (IMF) experts predicted on Mon­day that the recent drop in oil prices would persist, boosting the global economic activity by 0.3 to 0.7 per cent next year.

In a joint statement released by the Fund, economists Rabah Arezki and Olivier Blanchard noted that Brent prices have fallen more than 46pc since the year’s peak in June of above $115 per barrel.

The process sped up by the November decision of the Organisation of Petro­leum Exporting Countries (Opec) not to reduce production.

The IMF’s chief economist Mr Blanchard and the head of its commodities research team Mr Arezki, described the price-drop as “a shot in the arm for the global economy”, adding that futures markets suggest oil prices will stay lower than levels in previous years.

They determined that both supply and demand factors have played a role in the sharp price decline since June. Futures markets suggest that oil prices will rebound but remain below the level of recent years.

There is, however, substantial uncertainty about the evolution of supply and demand factors as the story unfolds.

While no two countries will experience the drop in the same way, they share some common traits: oil importers among advanced economies, and even more so emerging markets, stand to benefit from higher household income, lower input costs, and improved external positions.

Oil exporters will take in less revenue, and their budgets and external balances will be under pressure.

Risks to financial stability have increased, but remain limited. Currency pressures have so far been limited to a handful of oil exporting countries such as Russia, Nigeria, and Venezuela.

Published in Dawn December 23th , 2014