Commodity prices and the World Economy Global Chief Economist Helge J. Pedersen Kemiens dag København 16. November 2011 1
Growth to be found in East and South <0% 0%-3% N/A 3%-6% 6%-10% >10% 2 2
3 The bleak economic outlook gives room for a verry easy monetary policy
4 Fundamentals, easy monetary policy and geopolitical uncertainty keeps commodity prices high
5 Financialization of commodity markets might have an impact on prices
Expensive spending programmes weigh on budgets - OPEC needs higher oil price to balance budgets 140 USD per barrel OPEC may have changed its price target range to USD 85-105/barrel from USD 70-90/barrel as Nordea forecast: 120 100 80 60 40 2009 2011 Q1 Q2 Q3 Q4 Year 2007 59 69 75 89 73 2008 96 123 117 57 98 2009 46 60 69 76 63 2010 77 79 77 88 80 2011E 106 115 110 110 110 2012E 112 113 114 115 114 2013E 116 119 121 123 120 20 0 Kuwait Venezuela Saudi Arabia Nigeria Iraq Algeria Russia Iran 6
7 Monetary policy expectations is decisive for the FX markets. A weak dollar increases commodity prices
8 A strong USD means lower commodity prices
9 The new world order is close to getting a reality
Real GDP at PPPs $bn Real GDP at PPPs $bn and China will become the biggest economy in the world by 2020 (real GDP at PPP) 60,000 50,000 40,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2009 2012 2015 2018 2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 US CN IN JP DE EU BR RU 30,000 20,000 10,000 0 10
Demographics tell everything Region, million persons 2050: 9.15 billion Euro p a, 575 R usland, 116 1950: 2,53 billion N o rd A merika, 4 4 8 Lat in A merika, 72 9 A f rika, 1.9 9 8 Europa 547 Nord Amerika 172 Rusland 103 Latin Amerika 167 Oceanien 13 Afrika 227 Asien 1.403 Oceanien, 51 A sien, 5.2 3 1 11
The demands for cars will soon start to rise at a dramatic pace in China and India Source: World Bank, Nordea Markets 12
Expected oil demand growth in China assuming Japan's and Korea's historic motorization rate - this might have a dramatic impact on oilprices USA Europe Source: EIA 13
China will account for 90% of net oil import growth between 2008-2035 14 Source: IEA
The Changing Global Diet Source: Global Harvest Initiative According to FAO global food demand will increase by70% by 2050 15
Factors affecting food prices Weather conditions Demographics Wealth Biofuel Speculation 16
G20 on the Action Plan on Food Price Volatility and Agriculture We have decided to act on the five objectives of this Action Plan 1. Improving agricultural production and productivity 2. Increasing market information and transparency 3. Reducing the effects of price volatility for the most vulnerable 4. Strengthening international policy coordination 5. Improving the functioning of agricultural commodity derivatives markets Cannes Summit Final Declaration, 4. November 2011 17
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