1. Commodity dependence hurts.Growth in China has a strong impact on commodity prices: it consumes nearly half of the global supply of industrial metals given its past investment led-growth model. A slowdown in China therefore leaves commodity dependent LATAM economies and Australia vulnerable.
2. Petrodollars become petropennies:With lower oil prices, the annual flow of petrodollars may have halved to around $200-300bn, by our estimates. This may reduce the demand for fixed income assets, which was a significant portion of major oil exporting sovereign wealth funds’ growing investments over the past decade.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
1. Commodity dependence hurts.Growth in China has a strong impact on commodity prices: it consumes nearly half of the global supply of industrial metals given its past investment led-growth model. A slowdown in China therefore leaves commodity dependent LATAM economies and Australia vulnerable.
