Lower oil prices will give the US economy a boost in the next two years, but will fail to lift global growth significantly as headwinds from the euro area, China, Brazil and Japan hold back economic activity, says Moody's Investors Service in its quarterly Global Macro Outlook report.
Moody's has raised its 2015 US GDP growth forecast to 3.2% - from 3% in the last quarterly report in November 2014 - and expects growth to remain strong at 2.8% in 2016.
''The US is one of the main beneficiaries of cheaper oil,'' says Marie Diron, a Moody's senior vice president and author of the report. ''The favorable economic environment in the US will encourage consumers and companies to spend part of the gains in real income that come from lower energy costs.''
Cheaper energy should add to US companies' already strong profits and promote business investment, the report says. The lower oil price reinforces other positive economic factors in the US, including low unemployment and the potential for real wage increases.
While lower oil prices will dampen activity in the US oil sector, the industry is a relatively small part of the US economy, accounting for less than 0.5% of total employment.
Stronger US GDP growth and hence imports will alleviate the negative impact of lower oil prices for Mexico and Canada.
Despite lower oil prices, Moody's has maintained its GDP growth forecast for the G20 countries at just under 3% in both 2015 and 2016, broadly unchanged from 2014.
''Lower oil prices should, in principle, give a significant boost to global growth,'' Diron adds. ''However, a range of factors will offset the windfall income gains from cheaper energy.''
Moody's global growth outlook is based on the assumption that oil prices will average USD 55 a barrel (Brent) in 2015, rising to USD 65 on average in 2016. The report assumes that oil prices will stay near current levels in 2015 because demand and supply conditions are unlikely to change markedly in the near future.
Brazil, which imports about as much oil as it exports, is forecast to have its slowest three-year growth period since the early-1990s between 2014 and 2016. Moody's forecasts Brazilian GDP growth averaging zero during that period.
Low employment growth, high inflation and high interest rates will constrain consumer spending, while the Brazilian government's consolidation of public finances will be negative for growth in the short-term.
In China, cheaper oil will not stop the gradual and ongoing economic slowdown. Higher energy taxes and government-controlled prices in some energy and transport sectors will dampen the impact of lower oil prices.
Moody's forecasts that China's GDP growth will fall below 7% in 2015 from 7.4% in 2014. In 2016, GDP growth is forecast to fall to 6.5%.
Moody's forecasts a sharp recession in Russia that will last until 2017. In Saudi Arabia, higher fiscal spending will maintain positive growth and offset the negative effects of lower oil prices.