Falling oil prices translate into an income transfer from producers to consumers

The fall in the oil price is broadly reflected across the current situation in the global economy and the outlook for the future. According to most assessments, the oil price drop is for the most part a positive supply shock that in the short term will support growth and slow inflation in net oil-importing countries. In addition to the oil price, long-term interest rates have also declined substantially in the euro area. As a whole, the outlook for the advanced economies has strengthened on average, while the outlook for many emerging economies has weakened. There are, however, major differences within the country groups, a fact also reflected in exchange rates. A particular case in point is the appreciation of the US dollar.