IMF Growth Scenario Has Warning for Mining Investments

John Robertson


In delivering its world economic outlook update last night, the International Monetary Fund reiterated its observation that the world has most likely entered a prolonged period of slow growth. Olivier Blanchard, the head of research at the Fund, described this as an environment in which advanced economies will grow at around 2% a year with emerging market economies growing at around 4%. In this context, the Fund has once again wound back the expected extent of a future growth acceleration. Realisation of this outlook would have important implications for resource sector investment decision making. Raw material demand grows most strongly when growth is accelerating. In the absence of a growth acceleration, metal usage growth is likely to be below average in the years ahead. That would feed into market balances, an important driver of prices. Market forecasts (and company investor pitches) based on historically average rates of growth which have typically included periods of rapidly accelerating demand will prove overly optimistic under these circumstances and should be heavily discounted when proffered as a basis for an investment decision.

John Robertson
John Robertson

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Please sign in to comment on this wire.

trending on livewire
Get the best of Livewire by signing up to our popular daily newsletter