OECD Noted Economic Slowdown Doesn't Bode Well for Commodities

Leading indicators in the major seven economies and major non-OECD economies, particularly China, India and Russia, point to deep slowdowns. And this does not bode well for commodity prices.

The data released by the OECD earlier this week indicates a synchronized decline in industrial production, with widespread softness among the BRIC economies, which also includes Brazil.

National Bank Financial chief economist and strategist Stéfane Marion estimates that the leading indicator for the BRIC country bloc actually contracted on a year-over-year basis in November, the first time this has happened in at least 12 years.

He said in a note:

Our research shows that leading economic indicators generally lead industrial production and commodity prices by roughly five months.

So even if the leading indicators start to improve in the coming quarters, Mr. Marion thinks commodity prices are unlikely to post a notable increase before the tail end of 2009.

Comments

[lbsterling:]

And if
National Bank Financial chief economist and strategist Stéfane Marion
is wrong, we will never hear of him again.

Jan 14 01:22 PM