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What To Buy To Benefit From Low Oil Prices. Part Two: India

By On December 12, 2014 5:31 pm


Forbes

By Chris Wright

Earlier this week, I started a series on countries that will benefit from the decline on oil prices with a piece onTurkey. As we discussed, countries that have a deficit in their oil supplies stand to benefit strongly from lower oil prices. The second example in the series is India.

Much of Asia is well-positioned for low oil prices. “Given that most economies in Asia are importers of energy, the correction in commodity prices bodes well for the region’s current account and inflation outlook,” says Taimur Baig, Deutsche Bank’s chief Asia economist. “This is welcome news particularly for deficit economies like India and Indonesia.” (Indonesia will be the third in the series.)

India imports almost 80% of its oil, so, like Turkey, it benefits from lower prices as its import bill falls and, with it, its trade deficit. Normally, you would expect low oil prices to help to keep a lid on inflation too, and also the fiscal deficit, since India has long subsidised fuel prices, which requires a lot of money from the government.

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