where needed, scope to strengthen f

where needed, scope to strengthen fiscal positions. Oil
exporters have to absorb a large terms-of-trade shock
and face greater fiscal and external vulnerabilities.
Those with fiscal space can allow public spending to
adjust gradually to lower oil revenues. In oil-exporting
countries with some exchange rate flexibility, a depreciation would facilitate the adjustment. Emerging market and developing economies also have an important
structural reform agenda, including measures to support capital accumulation (such as removing infrastructure bottlenecks, easing limits on trade and investment,
and improving business conditions) and raise labor
force participation and productivity (through reforms
to education, labor, and product markets). And lower
oil prices offer an opportunity to reform energy subsidies but also energy taxation (including in advanced
economies).
Advanced economies are generally benefiting from
lower oil prices. Growth in the United States is projected to exceed 3 percent in 2015–16, with domestic
demand supported by lower oil prices, more moderate fiscal adjustment, and continued support from an
accommodative monetary policy stance, despite the
projected gradual rise in interest rates and some drag
on net exports from recent dollar appreciation. After
weak second and third quarters in 2014, growth in the
euro area is showing signs of picking up, supported by
lower oil prices, low interest rates, and a weaker euro.
And after a disappointing 2014, growth in Japan is
also projected to pick up, sustained by a weaker yen
and lower oil prices.
In an environment of moderate and uneven growth,
raising actual and potential output continues to be
a policy priority in advanced economies. In many of
these economies, the main macroeconomic policy issues
are the persistent and sizable output gaps, as well as dis