Oil, commodity rout 'may severely impact markets'

Tokyo

THE collapse in oil prices signals a much wider and deeper malaise in the global economy that could see deflation spreading more generally, and bring destabilising swings in exchange rates and capital flows. It could also raise problems for borrowers in Asian and other emerging economies in servicing their external debt.

This sombre warning has been issued by the Washington-based Institute of International Finance (IIF), which says in a report that there are "important implications for financial markets" and for the global economy in the collapse of oil and other commodity prices.