the fed would be hard - pressed to hike rates by any significant measure ( as in june this year ) if oil prices continue to drop because inflation in the us will be soft. in addition, low oil prices increase the risk of deflation in the eu and japan, raising the likelihood that more easing measures would be put in place. in other words, ladies and gentlemen, whereas markets used to have the confidence in the trend of monetary policies, this new uncertainty from oil price movements is now seen to heighten volatility in financial markets by unsettling investor risk appetite and unseating inflation expectations. further, a continued decline in oil price could also change the balance of global growth prospects. there will be winners and losers if low oil prices persist. while the decline in oil is a dampener to inflation and could raise purchasing power for oil importers, it could also result in a loss of revenues for oil producers and lead to weak aggregate demand. with overall global growth still fragile, the significant drop and the weak prospects in oil prices have gotten more analysts discussing the risk of deflation in recent weeks. the philippines in focus : how do we see all these impacting the philippines? for us, low oil prices represent disinflation pressures. fuel and fuel - related items account for nearly 9 pct of our cpi basket. we have also seen transport fares being adjusted downward. in addition, the fall in oil prices could benefit us through an increase in household real income as well as the lower cost of production. i have been asked whether we are worried about deflation ( due to the substantial decline in oil prices ). well, deflation effects in the aes can spillover to our economy through lower trade. however, trade as a percentage of gdp is still relatively lower than those of our peers in the region. 1 so the risk here is probably only of a relatively small magnitude. as for deflation materializing in the philippines, the risk is not significant. for one, our demand conditions are firm. services and industry remain strong. and on the demand side, consumption is seen remaining robust. we heard sec. balisacan say yesterday that “ the worst is over on underspending ” and that the government is committed to ramping up spending. there are other factors that lead us to say that deflation is remote – or that note : trade value ( exports plus imports ) relative to gdp is low for the philippines as compared to most of our regional peers.

by the same token, norwegian companies can choose their debt and equity structure independently of the government's financial investments. both mainland private saving and business fixed investment have been high in recent years. thus a possible weak capital market has not been reflected in a low level of investment and saving. as a result of developments in the late 1990s, equities and funds make up an increasing share of households ’ total assets. the equity ratio of enterprises strengthened in the 1990s, with a rise in new equity capital from the markets in particular. norwegian limited companies excluding petroleum companies, financial undertakings and government activities, and groups and holding companies. the norwegian loan and capital market probably has weaknesses nevertheless, with thin securities markets and little breadth in investor and owner environments compared with some other countries. the reasons, and hence the solutions, can probably be found in the structure of the taxation of dwellings, property and financial assets, in a high level of government ownership of enterprises and in the organisation of pension saving in norway. investing even more government capital in norway would reduce the return on investments in the norwegian business sector and prompt other investors to invest elsewhere. using even more capital in the norwegian economy would probably also lead to a rapid relocation of jobs to other countries, as the krone would tend to appreciate.