WASH­ING­TON:

US deficit seen shrink­ing on job gains: CBO Low prices to de­lay 'peak oil de­mand' past 2030, says BofA

The Pak Banker - - FRONT PAGE -

The US bud­get deficit will shrink for a fifth straight year in 2016, mark­ing the long­est span of im­prove­ment since the sur­pluses of the late 1990s, as fall­ing un­em­ploy­ment helps in­crease rev­enue, the Con­gres­sional Bud­get Of­fice said. The fis­cal short­fall this year will de­cline to $468 bil­lion, or 2.6 per­cent of gross do­mes­tic prod­uct, com­pared with $483 bil­lion in the year ended Sept. 30 and $469 bil­lion fore­cast in Au­gust, the CBO said to­day in Wash­ing­ton. Next year the gap will be $467 bil­lion, com­pared with $556 bil­lion seen in Au­gust, ac­cord­ing to CBO. The non­par­ti­san agency said lower oil prices and stronger con­sumer spend­ing will help drive growth this year, pre­dict­ing a "slight fur­ther in­crease" in the dol­lar's value in for­eign-ex­change mar­kets. Mon­e­tary pol­icy will help un­der­pin the econ­omy for the next few years, it said. "Over the next year or two, deficits should stay pretty low, and that should be very en­cour­ag­ing," said Gen­nadiy Gold­berg, U.S. strate­gist at TD Se­cu­ri­ties USA LLC in New York. "Rev­enues are re­ally on their way up."

NEW YORK: The re­cent rout in oil prices could de­lay the on­set of "peak oil de­mand," or zero global de­mand growth, by around five years to beyond 2030, Bank of Amer­ica Mer­rill Lynch (BofA) said.

The bank had ear­lier ex­pected that the con­tin­u­a­tion of high oil prices above $100 per bar­rel since 2011 would re­sult in peak oil de­mand by 2025 as con­sumers moved to smaller and more fuel ef­fi­cient cars. "Even­tu­ally, high prices would have led to sub­sti­tu­tion out of oil al­to­gether, whether to­wards other cheaper fos­sil fu­els like nat­u­ral gas or out of fos­sil fu­els and to­wards al­ter­na­tives and re­new­ables and switched to al­ter­na­tive or re­new­able fuel," BofA said in a note on Jan. 23. It now es­ti­mates that if prices stay in the $50 to $70 per bar­rel range over five years, peak de­mand would be pushed out past 2030. Crude oil prices LCOc1 CLc1 have more than halved to be­low $50 a bar­rel since June due to a grow­ing glut of oil. The im­pact of per­ma­nently lower prices on oil con­sump­tion can be pro­found in the long run, the bank said.

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