Economist sees short-term humps as commodity boom settles in
Economist sees short-term humps as commodity boom settles in 07 March 2006
The commodities index was expected to remain strong for the next 15 years, however, Absa senior treasury economist Chris Hart said that this index would first experience a global slowdown period, which is expected over the next two to three quarters.
Speaking at a conference hosted by power and automation technology group ABB, on Tuesday, Hart said that problems in the world’s two main currencies have been causing a global currency stress, which might result in precious-metal prices diverging from other commodities and the euro.
Fewer new mine supplies, increased investment demand and more buying interest from the Central Bank, have amplified the currency stress further.
Hart said that protracted problems in the ‘Eurozone’ would result in the divergence between gold and the euro, which would continue for some time, and he forecast that gold would ultimately outperform platinum.
This comes, he said, at a time when the South African economy was on the verge of an economic growth shift from a consumption boom to an investment boom.
He said that this new position would bring greater balance to the economy and the reduction of inflationary pressure.
Hart predicted that an investment boom would also result in a growing commodity sector with increased green- and brownfield developments, more fund investments and more backward integration.
In addition, he predicted that it would also enable increased structural growth and the introduction of more multinational companies into South Africa.
This, coupled with favourable economic indicators, would enable the South African economy to achieve government’s 6% growth it intends to achieve with the Accelerated Shared Growth Initiative (Asgisa), Hart said.
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