Roubini Says Commodity Prices May Rise in 2010 (Update1)
By Rebecca Keenan and Jason Scott
Aug. 3 (Bloomberg) -- Commodity prices may rise further in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis.
“As the global economy goes toward growth as opposed to a recession you are going to see further increases in commodity prices especially next year,” Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. “There is now potentially light at the end of the tunnel.”
The Reuters/Jefferies CRB Index of 19 commodities has gained 12 percent this year as government stimulus packages boosted demand. Oil has jumped 56 percent in 2009 and copper has surged 86 percent.
Roubini, chairman of Roubini Global Economics and a professor at NYU’s Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee.
Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009 before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
Economic growth in China, the world’s biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier. China, the biggest contributor to global growth, overtook Japan as the world’s second-largest stock market by value on July 16 after the nation’s 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.
China will meet its target of 8 percent growth in gross domestic product this year, Roubini said.
Prices, Recovery
The Reuters/Jefferies CRB Index jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.
“That recovery will continue slowly, slowly over time,” Roubini said today.
Manufacturing in China climbed for a fifth month in July as the stimulus spending and subsidies for consumer purchases countered a collapse in exports and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.
Vale SA, the world’s biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that “the worst is over”.
The U.S. economy, the world’s biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent “trend,” Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
--. Editors: Andrew Hobbs, Teo Chian Wei
To contact the reporters on this story: Rebecca Keenan in Kalgoorlie at rkeenan5@bloomberg.net; Jason Scott at jscott14@bloomberg.net
Last Updated: August 2, 2009 22:23 EDT |
