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Statsguru: World economy experiencing recovery with investment activity

Falling production costs and efficiency gains have lowered the break-even price for the shale oil industry

Ishan Bakshi 

money, investment, income, growth, economy

The is experiencing a broad-based cyclical recovery with activity and trade rebounding, the said.

Growth has perked up to three per cent in 2017, with both emerging and advanced economies growing at a faster clip (Chart 1). There are reasons to be cautiously optimistic about the prospects of growth across major regions.

In the US, while employment growth has slowed (Chart 2), the slack in the labour market is diminishing and the economy is moving towards full employment. But, though productivity has improved recently (Chart 3), it does remain a major constraint to growth.

In the euro zone, spurred by policy stimulus and strengthening global demand, both and export growth have been quite robust (Chart 4).

In China, where rebalancing continues, both public and private activity has fallen sharply (Chart 5). But exports have revived (Chart 6) on the back of stronger world growth. The expects global trade growth to average roughly at four per cent in the coming years (Chart 7), boosting prospects of major exporting regions.

On the issue of oil prices, the decline in prices between 2014 and 2016 was triggered by a combination of receding geopolitical risks, weaker global growth prospects and the surge in US shale oil production, the report said. The latter is one of the main drivers of global (Chart 8).

Now, falling production costs and efficiency gains have lowered the break-even price for the to less than $50 per bbl (chart 9). Some argue that even at $30 per barrel, about 50 per cent of the US shale reserves are viable, suggesting little headroom for to move up.

StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines

Source: Global Economic Prospects, World Bank, JANUARY 2018 ; Compiled by BS Research Bureau

First Published: Mon, January 15 2018. 02:05 IST