OPINION: Recessions are looming - but that may be good news
There’s both good news and bad news in an apparent peaking in the prices of most commodities over the past month.
A month ago copper, regarded as the metal most sensitive to economic activity and a lead indicator of economic conditions, was trading around $US9700 a tonne a month ago. It is now around $US8000 a tonne. While the markets seem convinced that inflation is being brought under control, central banks have made it clear that, in the near term at least, they will continue to hike interest rates aggressively to ensure that they kill off the worst inflation rates in decades.
China’s on-again, off-again economy – driven by its severe COVID policies – is another source of volatility and uncertainty. Between its COVID policies, the impact of the big surge in commodity prices – including iron ore – earlier this year and the economic impacts of recent severe floods and droughts, China is experiencing its weakest economic growth in decades.. Three months ago the price was above $US160 a tonne. It’s now about $US113 a tonne in a clear sign that, despite attempts by China’s authorities to generate economic stimulus via infrastructure investment, the economy is cooling.
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