Asia: Commodity Dynamics |
§ Oil prices have had a
roller coaster ride and it is no coincidence that commodity prices were
dragged along with it in the last two quarters. Our
economic team revised our average brent crude oil price assumption up to
USD60/bbl for 2015 (USD50-55/bbl previously) and expect it to average
USD70/bbl in 2016.
§ We look for firmer oil
prices to feed into higher price levels and lift economies from deflationary
risks. Inflation is still non-threatening but price pressures give central
bank room to normalize interest rates. For those on an easing cycle, we fear
that the window for rate cuts could be closing soon.
§ We expect moderate, not devastating impact on crop yields
and rise in the prices of wheat, rice, cocoa, sugar, crude palm oil based on
the four most recent El-Nino episodes in the past 15 years.
These should be
positive for IDR, MYR, THB and to a lesser extent PHP via improvement in
terms of trade and consumption. With some staple food affected, Asian
economies are vulnerable to inflationary pressures ahead.
§
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