The good news in commodities

While worrying about the slump in commodity prices and its effect on emerging markets, investors are missing one key factor.

Summary: The IMF suggests the commodities slump could hold growth lower for longer in the commodity exporting nations. But demand for commodities hasn’t collapsed – all we’re witnessing is a price correction. Export volumes are strong, so investors shouldn’t get carried away by assertions that global trade has collapsed.

Key take-out: While weaker commodity prices do have an impact, without an actual fall in demand (driven by global recession), they generally don’t make a large or sustained hit on real growth.

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