Best commodities - IMF Downgrades Growth Forecasts Commodities Slump - April World Economic Outlook : Commodities tumbled after rallying earlier in the day as the IMF revised down its growth forecasts for the US, Japan and the UK. The main reason for the downgrade was surging oil prices and rising inflation in emerging markets. Growth outlook for the world as a whole was kept unchanged, though. Crude oil prices initially extended gains to new highs in more than 2 years but then reversed with the front-month WTI and Brent contracts plummeting -2.54% and -2.11%, respectively. Precious metals also slumped as driven by slides in oil and strength in the US dollar. Possibility of reaching a resolution in Libya also triggered profit-taking.
In its April World Economic Outlook (WEO), the IMF unveiled its latest forecasts on global economy. On the whole, the world lender believes global economic growth is gaining momentum given 'the improvement in financial markets, buoyant activity in many emerging and developing economies, and growing confidence in advanced economies'. However, the most prominent risk is rising commodity prices. Rising food and commodity prices pose 'a threat to poor households, adding to social and economic tensions, notably in the Middle East and North Africa'. While disruptions on oil production and surges in oil prices so far would have 'only mild effects on economic activity', risks are on the 'downside' with 'falling spare oil production capacity'.
The IMF maintained its global growth forecasts at +4.4% and +4.5% for 2011 and 2012 respectively, holding the notion that rising oil prices appear unlikely to derail the recovery. However, given drastic changes in the situation Middle East and North Africa, and disasters in Japan, adjustments were made on individual countries. The IMF expects the US economy will grow 2.8% in 2011, down from +3% projected in January. Japan's growth was lowered to +1.4% from +1.6% as a result of the earthquake and tsunami. In the UK, the economy will expand +1.7% this year, compared with a +2% growth as estimated in January. Growth in the MENA region is expected to +4.1% in 2011, down from previous forecast of +4.6%.
The latest oil supply shock has been brought about by tensions in the MENA region. Fighting in Libya has resulted in the shutdown of most of the oil facilities in the country. Now the African Union is trying to negotiate a ceasefire between the rebels and forces supporting Qaddafi. The Union said Qaddafi agreed to 'the immediate cessation of all hostilities' and to talks 'with the view to adopting and implementing the political reforms necessary for the elimination of the causes of the current crisis'. However, the rebels rejected the proposal as they request Qaddafi to step down. Oil prices were affected by the negotiation as a ceasefire signals a possibility of resumption in oil production and exports.
In its April World Economic Outlook (WEO), the IMF unveiled its latest forecasts on global economy. On the whole, the world lender believes global economic growth is gaining momentum given 'the improvement in financial markets, buoyant activity in many emerging and developing economies, and growing confidence in advanced economies'. However, the most prominent risk is rising commodity prices. Rising food and commodity prices pose 'a threat to poor households, adding to social and economic tensions, notably in the Middle East and North Africa'. While disruptions on oil production and surges in oil prices so far would have 'only mild effects on economic activity', risks are on the 'downside' with 'falling spare oil production capacity'.
The IMF maintained its global growth forecasts at +4.4% and +4.5% for 2011 and 2012 respectively, holding the notion that rising oil prices appear unlikely to derail the recovery. However, given drastic changes in the situation Middle East and North Africa, and disasters in Japan, adjustments were made on individual countries. The IMF expects the US economy will grow 2.8% in 2011, down from +3% projected in January. Japan's growth was lowered to +1.4% from +1.6% as a result of the earthquake and tsunami. In the UK, the economy will expand +1.7% this year, compared with a +2% growth as estimated in January. Growth in the MENA region is expected to +4.1% in 2011, down from previous forecast of +4.6%.
The latest oil supply shock has been brought about by tensions in the MENA region. Fighting in Libya has resulted in the shutdown of most of the oil facilities in the country. Now the African Union is trying to negotiate a ceasefire between the rebels and forces supporting Qaddafi. The Union said Qaddafi agreed to 'the immediate cessation of all hostilities' and to talks 'with the view to adopting and implementing the political reforms necessary for the elimination of the causes of the current crisis'. However, the rebels rejected the proposal as they request Qaddafi to step down. Oil prices were affected by the negotiation as a ceasefire signals a possibility of resumption in oil production and exports.
Categories:
Stock Market
