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Main » 2016 » May » 20 » Commodity economy. Spiral problems
Commodity economy. Spiral problems



Macquarie Research study showed what risks may arise in the near future, countries that depend on commodity exports - by AMarkets materials.




Low commodity prices could lead to a serious budget deficit. This will cause the economy to devalue the currency. Devaluation may be scope in the range of 30-50%. This, in turn, will trigger inflation. Countries have to raise interest rates. Perhaps regulators will not raise rates quickly - since the rapid increase in interest rates will lead to a rapid decline in economic growth. But in any case - capital will flow away from the economy and the sovereign debt will be pulled upward.

Regulators have tightened economic conditions and introduce more severe capital controls. The fiscal situation will deteriorate - will have less tax revenues amid falling revenues raw materials industry. Reluctance to reduce budget expenditures will occur against the background of tighter monetary policy and its negative impact on GDP growth. The ratio of public debt to GDP will continue to grow. To cope regulators require more budget surplus - not 2.5% and 5% of all GDP (suspended). This means that the problem is complicated.



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