Economics Investing

Oil and GDP

I’m not an oil expert by any stretch of the imagination. However, oil supply/demand and prices represent key barometers for global economic activity, inflation, economic health of specific countries as well as specific companies. It’s highly integrated into pretty much everything economic/investing on a global basis.

I came across this very interesting chart the other day showing the impact on GDP by country from a $10 fall in oil prices. With the recent precipitous drop in oil prices and based on the data in the chart, it appears Canada has felt the most pain among the seven countries listed in the chart while Japan appears to be the biggest beneficiary. Presumably, Canada would be the biggest beneficiary of the seven if oil price trends were to reverse and rise from here while Japan would be the biggest loser.

This is very useful information if oil price dynamics play any role in your portfolio construction and/or asset allocation decisions, especially for more actively managed strategies.