Commodities | EEMEA | Monetary Policy & Inflation | US
Ukraine Conflict Could Trigger Oil Shock and Global Recession
- By Dominique Dwor-Frecaut
- 4 minutes read
Summary
• The US current account deficit will likely fall through 3.5% of GDP, the level where the 2000s dollar downtrend began. This is why:
o Households’ excess savings are unlikely to increase, unlike the post-GFC period.
o Higher interest rates from the Fed will lower the income surplus.
o Still-restrictive visa policies are likely to cap the recovery of the travel surplus.
o With the growth in shale oil production slowing, the risks to the petroleum balance are tilted to the downside.
Market Implications
• Negative USD.
Summary
• The US current account deficit will likely fall through 3.5% of GDP, the level where the 2000s dollar downtrend began. This is why:
o Households’ excess savings are unlikely to increase, unlike the post-GFC period.
o Higher interest rates from the Fed will lower the income surplus.
o Still-restrictive visa policies are likely to cap the recovery of the travel surplus.
o With the growth in shale oil production slowing, the risks to the petroleum balance are tilted to the downside.
Market Implications
• Negative USD.
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