Wednesday, May 14, 2014

China troubles to impact commodity producing countries more

On India, the impact of slowdown in China will not be that significant because India is not a huge supplier of commodities to the world. 

When China began to grow very rapidly after the late 1990's, it obviously drove demand for commodities higher along with the prices. So the commodity prices have seen huge increases between 1999 and July 2008, and now that the Chinese economy is slowing down, the increase in the rate of growth of purchases has slowed down considerably, and in some cases, the growth is negative.

So, my view is it will have very meaningful impact on resource producers such as Brazil, Argentina, Africa, Central Asia, Middle East, and Russia. And, I don't think that emerging economies will actually accelerate upside this year, I think they will slow down further.