From the CEO OF EMIS

Last week, the World Bank released its latest forecast for the global economy. Its forecast for emerging and developing economies as an aggregated group of countries is 3.5% for this year. That figure, as the bank noted, disguises very different prospects for two distinct types of emerging markets – commodity exporters and commodity importers.

Developing countries that are net exporters of commodities are expected to grow at a rate of just 0.4%

this year while importers’ growth is projected at 6%. These figures reflect the huge role that commodities have played in the rise and fall of particular emerging markets. Countries like Brazil, Russia and Nigeria have relied too heavily on commodities as a foundation for growth and have neglected the policy decisions required to provide the stable economic conditions that go with more balanced economies.

The lesson is that developing countries cannot expect to thrive just because they are blessed with natural resources. Commodities have proved to be a powerful booster of growth but the harder-won momentum that comes from investment in productivity and infrastructure is the hallmark of a successful emerging market.

It is also worth saying that a 6% growth rate for those countries less dependent on the commodities cycle is a strong counterweight to much of the pessimism that emerging markets have attracted in the recent past.

Guy Dunn
Chief Executive Officer

Here are a few articles I came across on the EMIS service this week related to commodities:

DEMAND FOR STEEL FALLS GLOBALLY

The major steel associations of different countries will take to G7 group of countries, the issue of surplus steel availability in the global market.

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OIL PRICES WON´T AFFECT INDIA ECONOMY

Minister of State for Finance Jayant Sinha, declared that Indian economy will be "fine" if the oil price stays in the range of USD 40-60 per barrel.

INFLATION AND DECREASE OF REAL WAGES CONCERNS RUSSIA

Low oil prices, Western sanctions due to activities in Ukraine and counter-sanctions and an economy declining 3.7% last year.

Roughly a year after beginning to suffer the full effects of a recession that was the sharpest contraction for Brazil’s economy in 25 years, there are fears that the recession will deepen further. Foreign investment has taken a hammering as a result of the ongoing political problems, inflation is at more than double the government’s target and household consumption fell by 6.3% in the first quarter of 2015.

BRAZIL AGRICULTURE: GROWING AGAINST ALL ODDS

In 2015, the agriculture sector grew by 2.4%, triggered by higher production of its main segments – soybean, wheat, coffee and beef meat.

INDIA INFRASTRUCTURE: BUMPS IN THE ROAD

Slow-moving environmental clearances, budget constraints and land acquisition issues are the major challenges infrastructure investment is facing in the public sector.

According to a recent study by the Columbia Water Center-India, the current drought in 10 states of India is expected to hit the economy by $100 billion.

South Korea and Cuba broke a decades-long lack of formal diplomatic exchanges when foreign minister Yun Byung-se met with his Cuban counterpart.

While there are no guarantees that Metro Manila’s traffic congestion woes will be eliminated by the end of President-elect Rodrigo Duterte’s term.

UK solar energy company Hive Energy will build a 50-megawatt (MW) solar project on Cuba, under a deal that it has signed with Union Electrica de Cuba.

As reported by Valor Economico, the largest dairy products group in the world, Lactalis, affirmed its ambition to take the leader’s position in Brazilian cheese market.

Following the acquisition of Brazilian food company Santa Amália in 2013, Peruvian group Alicorp now expands its business in Brazil by focusing on cosmetics segment.

A plan aimed at developed of the electric mobility would be the driving force for Poland’s economy, PNB - Polish News Bulletin reported on Wednesday.

U.S. Acting Under Secretary for Terrorism and Financial Intelligence Adam Szubin will discuss this week with European Union officials extension of sanctions set on Russia.

The President of the US Barack Obama will visit next month Poland and Spain in its last trip as president to Europe, Agence France Presse reported.

Turkish energy company Unit International has signed a $4.2 billion deal to build seven power plants in Iran, BYEGM - Press Review reported citing a company’s statement.

Read more…

Saudi Arabia’s oil minister Khalid Al Falih has said that the national oil company Saudi Aramco will keep its long-term policy to maintain some production capacity spare.

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Iranian shipping and petroleum companies have reached preliminary deals estimated at some $2.4 billion with major Korean shipyards for construction of cargo ships.

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