Global Macro Views

The global commodity boom ended with a thud during the second half of 2014, and 2015 has failed to turn out much better for those betting on a rebound. The lessons from the boom/bust cycle are always evident in retrospect with producers realizing they should have taken advantage of the boom to diversify their economies, while consumers reap the benefits of lower prices in the aftermath. Unfortunately, as the downturns in Russia, parts of Latin America and Africa make clear, few take advantage of the good times to reform and instead are subject to increased economic volatility when the tide turns the other way.

As for consuming economies, the benefits of lower commodity prices finally appear to be feeding through. Indeed, lower gasoline prices are one of the reasons the U.S. consumer appears to be spending again after a poor start to the year. Another example is India where net trade remains a positive due to cheaper imports. We continue to anticipate that lower commodity prices will be a modest positive for global growth in the second half of 2015. They will also help to keep global inflation acquiescent, which should lessen the need for the Federal Reserve or Bank of England to move at anything but a gradual pace when interest rate hikes commence.

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