Washington, D.C., December 10, 2014 - Global GDP would be boosted by roughly '½ percent over the next two years if the recent oil price decline is sustained, according to a new report by the Institute of International Finance.

"The overall impact on global growth is clearly positive," said Charles Collyns, chief economist at the IIF. "The price drop is largely a consequence of surging oil supply rather than a sign of weaker oil demand. The result is a shift in purchasing power from producers to consumers that should provide a significant boost to global demand at a time of excess capacity. At the same time, there are winners and losers across countries and regions-notably in emerging market countries."

"Corporate earnings will gain from such a supply shock, although oil related sectors will suffer, clouding the prospects for equity markets as a whole," said Hung Tran, executive managing director at the IIF. "The impact on long-term interest rates is also less clear-cut, depending on the balance between higher real rates from rising growth expectations and lower inflation expectations."

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The report noted that the biggest beneficiaries are net energy importing countries, including the Euro Area and Japan, among advanced economies. The U.S. economy will also get a significant boost, given its high energy intensity, with a minor offset from the impact on oil profits and investment. Among emerging market countries, the biggest beneficiaries of the price drop include China, India, Indonesia, Turkey and Chile.

The report also noted that large oil exporters substantially dependent on oil-related revenues will experience weaker current account positions and substantial pressures on their budgets. Most Gulf exporters like Saudi Arabia have sufficient accumulated assets to absorb the impact, but others countries with thinner cushions will need to cut back spending and face pressures on their exchange rates. Heavily exposed countries, the IIF noted, included Iran, Iraq, Nigeria, Russia and Venezuela.

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The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. IIF members include commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. For more information visit www.iif.com.'