In the Australian bank’s economic update for the US, NAB said decreases in oil prices are adding to the growth of the US economy – but the benefits are being offset by increases in the US dollar.
“We looked at the implications of the fall in the crude oil prices. Our conclusion then was that the impact was probably a positive one although it was being offset by the continuing appreciation of the US dollar,” the report from NAB said.
“In terms of the impact of the dollar appreciation, our import and export equations suggest that an eight per cent appreciation can be expected to lead to net exports detracting around [three quarters of a per cent] from growth over time,” the report said.
“However the dollar has been on a modest upward path for a few years now so the additional headwind on growth from the recent move is smaller,” NAB said.
NAB also pointed out that despite headwinds on the economy created by the increasing value of the US dollar, it anticipates the US will see a stronger rate of GDP growth in 2015.
“Rising business and consumer confidence, improving balance sheets, a strengthening labour market, solid investment conditions, declines in oil prices and a fading headwind from fiscal policy suggest that the US is likely to see a stronger rate of GDP growth in 2015,” NAB said.
“We are projecting [a] 3.0 per cent [growth in GDP] compared to 2.3 per cent for 2014,” it said.
