Hledat v komentářích
Investiční doporučení
Výsledky společností - ČR
Výsledky společností - Svět
Týdenní přehledy

Detail - články
The Global Implications of Falling Commodity Prices

The Global Implications of Falling Commodity Prices

28.8.2013 11:59

The decade-long commodity-price boom has come to an end, with serious implications for global GDP growth. And, although economic patterns do not reproduce themselves exactly, the end of the upward phase of the commodity super-cycle that the world has experienced since the early 2000’s dims developing countries’ prospects for continued rapid catch-up to advanced-country income levels.

Over the year ending in July, The Economist’s commodity-price index fell by 16.5% in dollar terms (22.4% in euros) with metal prices falling for more than two years since peaking in early 2011. While food prices initially showed greater resilience, they have fallen more sharply than those of other commodities over the past year. Only oil prices remain high (though volatile), no doubt influenced by the complex political events in the Middle East.

In historical terms, this is not surprising, as our research into commodity super-cycles shows. Since the late nineteenth century, commodity prices have undergone three long-term cycles and the upward phase of a fourth, driven primarily by changes in global demand. The first two cycles were relatively long (almost four decades), but the third was shorter (28 years).

The upward phases of all four super-cycles were led by major increases in demand, each from a different source. During the current cycle, China’s rapid economic growth provided this impetus, exemplified by the country’s rising share of global metals consumption.

While these cycles reached similar peaks, the downswings’ intensity has varied according to global economic growth. The downswings following World War I and in the 1980’s and 1990’s were strong; in contrast, the dip after the Korean War, when the world economy was booming, was relatively weak. After World War II, the super-cycles of different commodity groups became more closely synchronized (including oil, which had previously shown a different pattern).

Just as China’s economic boom drove commodity-price growth in the current cycle, so the recent weakening of prices has largely been a result of its decelerating GDP growth, from double-digit annual rates in 2003-2007, and again in 2010, to roughly 7.5% this year. While projections of China’s future growth vary, all predict weaker economic performance in the short term – and even lower growth rates in the long term.

The fundamental short-term issue is the limited policy space to repeat the massive economic stimulus adopted after the collapse of Lehman Brothers in 2008. China’s investment-led strategy to counter the crisis left a legacy of debt, and the continued deterioration of the demand structure – now characterized by an extremely high share of investment (close to half of GDP) and a low share of private consumption (about 35%) – further constrains policymakers’ options.

There is a consensus that these abnormal demand patterns must change in the long term, as China moves to a consumption-led growth model. But, to accomplish this transition, China’s leaders must implement deep and comprehensive structural reforms that reverse a policy approach that continues to encourage investment and exports while explicitly and implicitly taxing consumption.

The uncertainty surrounding China’s impending economic transformation muddies the growth outlook somewhat. Some forecasters predict a soft landing, but differ on the growth rate. Official estimates put annual GDP growth at 6.5% in 2018-2022, while Peking University’s Michael Pettis, for example, regards 3-4% growth as consistent with continuous rapid consumption growth and the targeted increase in consumption’s share of GDP.

While hard-landing scenarios, associated with a potential debt crisis, are also possible, the authorities have enough policy space to manage them. In any case, downside risks are high, and room on the upside is essentially non-existent.

The main engine of the post-crisis global economy is therefore slowing, which has serious implications for one of the last decade’s most positive economic trends: the convergence of developed and developing countries’ per capita income levels. Just as China’s economic boom benefited commodity-dependent economies, primarily in the developing world, its slowdown is reflected in these economies’ declining growth rates. (In fact, while several South American countries have been among the hardest hit, even developed countries like Australia have not been immune.)

If weak global demand causes the current commodity super-cycle’s downswing to be as sharp as those of the post-1918 period and the late twentieth century, the world should be prepared for sluggish economic growth and a significant slowdown – or even the end – of income convergence worldwide.

José Antonio Ocampo, a former UN under-secretary-general and finance minister of Colombia, is a professor at the School of International and Public Affairs, Columbia University. He is the co-author (with Luis Bertola) of The Economic Development of Latin America since Independence. Bilge Erten is a post-doctoral fellow at the Committee on Global Thought, Columbia University.

Copyright: Project Syndicate, 2013.

Váš názor
Na tomto místě můžete zahájit diskusi. Zatím nebyl zadán žádný názor. Do diskuse mohou přispívat pouze přihlášení uživatelé (Přihlásit). Pokud nemáte účet, na který byste se mohli přihlásit, registrujte se zde.
Aktuální komentáře
14:19Víkendář: Po Američanech se čínskému tlaku začíná bránit i Evropa
10:50PŘIVÁDÍME: Nokia. Nová technologie a geopolitické obavy vytvářejí investiční příležitost
14:37Víkendář: Jak vidí současnou americkou a globální realitu bývalý šéf CIA
10:07PŘIVÁDÍME: Volvo. Výrobce nákladních aut odměňuje štědře
22:01Poklidný závěr týdne na amerických trzích
19:31Vrací se Marxova doba?
18:28PŘIVÁDÍME: Skanska. Stabilní akcie s lákavou dividendou
17:06František Kronus: Evropská dluhová krize II?
17:05Koruna zakončuje týden oslabením, euro nepotěšil italský vládní program  
17:00Prahu táhl dolů tabák. V USA září Bioblast Pharma  
16:29Technická analýza: Výnosy dolaru tlačí korunu dolů
15:47Akcionáři schválili v Kofole rekordní výplatu dividend
15:02Perly týdne: Ekonomika bude dál šlapat, Tesla bez 10 miliard dolarů ne
14:22V ospalé Praze lehce ční Philip Morris, červené Evropě by mohly pomoci pozitivně naladěné USA
14:15Applied Materials po rozpačitém výhledu drží divokou kartu (komentář analytika)  
13:48Reuters: Oživení půjček otevírá novou kapitolu pro maďarské banky
13:22Příští lídři Itálie. Dokážou ji vést? A co na to trhy?
12:08Čína má prý pro Trumpa návrhy, jak na zlepšení obchodní bilance
10:33Jak autoritářská vláda v Maďarsku vyhnala Sorose z Budapešti
10:30Italská vláda dohodnuta, ale euro se drží. Koruna koriguje ztráty  

Související komentáře
Nejčtenější zprávy dne
Nejčtenější zprávy týdne
Nejdiskutovanější zprávy týdne
Denní kalendář hlavních událostí
Nebyla nalezena žádná data