Roughly 20% decline in oil prices could boost global growth by 0.3-0.4 percentage points, and reduces the downside risks to the global growth outlook, a report by Barclays said.Energy equities are down 15%, and oil producing currencies like the Russian Ruble and the Norwegian Krone have fallen significantly. But more importantly, the positive impacts on consumer equities, global capital spending, and trade balances have yet to be felt.

Lower oil prices should benefit the global economy but will cause a shift in the external balances of some countries. A fall in prices is equivalent to a tax cut for oil importers, which is likely to increase spending in other goods and services categories.

Additionally, cheap oil lowers input costs for energy-intensive production, which should boost economic activity. Our US equity analysts make the same conclusion, namely that the fall in oil prices is a net positive for the US economy to the tune of $30bn.

In Barclays forecast China will grow by a healthy 7.0% in 2015 (6.8% in 2H15) and 6.6% in 2016, after an expected 7.3% expansion this year. But in GDP growth terms, Barclays expect India to overtake China by 2016 with growth of more than 7%.

For context, oil demand from these two economies accounts for 30% of non-OECD demand and both are expected to account for 30% of the annual growth in global demand in 2015.
Source: Barclays