Every other Tuesday, we release 5 Minutes for Business, a publication written by Hendrik Brakel, our Senior Director of Economic, Financial and Tax Policy. In these publications, Hendrik briefly describes current issues that affect the Canadian economy and provides insight on what it will mean for Canadians today and the future. In this week’s edition, he looks at the global demand for natural resources and provides his opinion on whether or not the commodity supercyle we’ve been riding is over.
A commodity supercycle is a period of unusually strong industrial and urban development, where demand for natural resources outstrips supply, sustaining decades of high prices. Until recently, the prices of commodities such as oil, corn and metals were on the rise and, at one point, were even soaring. With the slowing of emerging markets, the demand for and the prices of commodities have fallen, but this doesn’t mean the commodity supercycle is over. If we look towards 2020, emerging Asia is forecasted to grow 6.5% and Latin America and Africa will grow 3.2% and 6% respectively. The global middle class is also expected to grow to 3.2 billion people—that’s a lot of new consumers and a lot of commodities needed as people get wealthier.
While prices aren’t expected to hit the lofty heights of 2007, the commodity supercyle is not over. This is good news for Canada because we have some of the most efficient natural resource producers in the world.
Read 5 Minutes for Business.
For more information, please contact Hendrik Brakel.