THE Singapore economy, as a net importer of oil, stands to benefit from lower global oil prices, said Trade and Industry Minister Lim Hng Kiang in Parliament on Monday.
A drop in oil prices will translate into lower electricity tariffs and fuel costs, which will directly benefit businesses and consumers, he said in response to queries by several MPs on the impact of the decline in oil prices in Singapore.
Global oil prices have fallen sharply in recent months on the back of sluggish global demand and strong supply conditions. Since June 2014, the benchmark Brent oil price has declined from a peak of US$115 per barrel to around US$50 per barrel recently.
"For businesses, lower electricity tariffs and fuel costs will help to lower their input costs. This will help improve their margins, and could also dampen the pass-through of business costs to consumer prices," he said.
As for consumers, they will benefit from lower spending on electricity and other oil-related items such as petrol. Lower inflation in the economy could also increase their purchasing power, thereby stimulating consumption and further boosting the economy.