With rising commodity prices, global commodity buyers are expected to pay producers $ 5.2 trillion this year compared to 2019. Citigroup analysts have presented a new basic scenario.
According to a report dated 13th, the increase is equivalent to 5% of the world’s gross domestic product (GDP). If the forward price in the second half of this year becomes a reality, product buyers will pay $ 6.3 trillion compared to 2019, equivalent to 6.2% of GDP.
In any case, the increased GDP ratio is said to be comparable to the impact the world experienced during the oil crisis of the early 1970s.
“The longer the product shock, the greater the negative impact on consumers of the product. It is also a deduction for global growth and stocks,” the report said.
Europe and some emerging economies, in particular, are vulnerable to growth if the product shock is prolonged. Analysts also pointed out that euro-denominated credit products will also be affected. On the other hand, he also analyzed that the currencies of South American countries might benefit.
Original title:Global Commodity Shock Is on Track for 1970s Level, Citi Says(excerpt)