Five charts that show why the global recovery is far from secure

Linda J. Dodson

It’s not been hard to quantify the economic devastation caused by Covid-19.

Across the globe, gauges of activity, demand and output chalked up record falls as the virus dealt a body blow to industries and consumers.

Often, those were followed by new records: bounce-backs of unprecedented speed and strength, which have provoked debate among economists about the shape of the current recovery.

Received wisdom suggests a fresh economic shock prompted by a second wave of the virus would be more profound than the first, with Governments and central banks having already exhausted a huge amount of ammunition in stopping a meltdown earlier this year.

Against the looming threat, these five indicators suggest a full recovery remains some way off – with signs that the comeback has run out of steam.

Copper

Copper is sometimes known as “Dr Copper”, due to its ability to indicate the underlying health of the global economy.

If it truly deserves that title, the signs are good: prices have recovered strongly over recent months, rising around 40pc to easily shake off the falls prompted by coronavirus.

Copper is prized for its unique conductivity, meaning it is used in wiring for houses, cars and electronic goods.

The metal has benefitted from the push-pull of falling supply and rising demand. Miners such as Antofagasta have seen their output drop as the virus forces new safety steps, while Chinese demand remains voracious.

Taken together, those factors might have left copper looking particularly burnished. ING’s Wenyu Yao, a senior commodities strategist, says the supply-side risks are beginning to fade – which might give a truer picture of the state of play for the metal.

Source Article

Next Post

Britain is about to be sucked into a catastrophic economic doom loop

Yes, it was possible to finance a lot more infrastructure investment through borrowing than previously thought thanks to ultra-low gilt yields, but even current spending would have ended up uncomfortably high. The pressure to hike taxes was thus already intense, hence February’s row about a mansion tax. Yet without the […]

You May Like