For example, commodity giant Glencore’s share price fell 78% in the 3 months between August to October while it has now rise 65% upwards again in just the past 7 days.
All of these insights are supported by the latest Deloitte survey of UK Chief Financial Officers just released which shows weakness in emerging economies and equity markets have hit business confidence.
CFOs' perceptions of external financial and economic uncertainty have seen the sharpest rise since Deloitte started their survey five years ago.
60% of CFOs said that the slowdown in China will have a negative effect on their business in the next twelve months.
However, the fall in the price of commodities has left net importing countries such as the US which currently has a 16% current account deficit, much better off and allows companies using commodities as inputs to generate much higher margins and offer lower prices, as a result lowering inflation.
Economic Slowdown In Essay
Yet, this may in fact be a bad thing as interest rates in the US and UK are already almost zero and verging on deflation, now a major problem which is currently preventing the central banks from being able to raise interest rates - something that is long overdue.
As evidence, the Asian Development Bank predicts that excluding Japan, the whole South East Asian region’s growth will be 5.8% this year vs. In the latest sign of the slowdown in the world's second biggest economy, Chinese manufacturing activity fell in September to its lowest in six and a half years, according to purchasing managers data.
This slowdown has occurred because of the economy shifting from investment to consumption as the main future driver of growth.
Find more statistics at Statista The existence of this slowdown and shift away for investments is a disaster for commodities.
China is the world’s biggest importer of crude oil consuming one of every 13 barrels globally, it also imports 45% of the world’s copper and almost half of global aluminium, nickel and steel.