Last year’s outbreak of the epidemic, the global economy was once a collective standstill, resulting in raw materials and product suppliers due to the prospect of a major cut in production capacity. However, with the central banks around the big open water hose, developed countries and because of the introduction of vaccines and push up consumer demand, the recent counter to many products due to supply tension and price increases, indicating that the perfect storm of inflation suddenly, the market began to worry about whether it will repeat the tragedy of the 1970s, but also has made the economy ranked executive, suffering from the epidemic and inflation in Brazil fell out of the global 10, analysis directly said that the economy of South America has gone!
Even if the consumer how reluctant, but also can not stop the wind of all things rising, expected to feel within six months! Due to the soaring prices of corn, cotton, wheat and other raw materials, multinational manufacturers of household goods have announced price increases, trying to pass on the cost to consumers.
The same situation also appeared in the construction industry, wood prices on Friday (23) and a record high, the spot price of wood traded on the Chicago Mercantile Exchange rose to about $ 1,359 per thousand board feet (mbf), a cumulative increase of more than 3.75 times in the past year.
The National Association of Home Builders (NAHB) said the rising cost of lumber has increased the average price of a new single-family home by more than $24,000, while the average price of a split-level home has increased by nearly $9,000 per home. Another Realtor.com report showed that the median monthly rent rose 1.1 percent year-over-year to $1,463 per month in March in the nation’s 50 largest housing markets. This is the first time since last summer that rent growth has accelerated. Local media described the U.S. as being in an “era of general inflation.
In addition to lumber, other raw material prices should not be underestimated. Among them, corn futures prices over the past year rose 96%; cotton and wheat futures prices rose 54% and 50%, respectively. In order to cope with the pressure of rising costs, Coca-Cola, Procter & Gamble (P & G), Nestle (Nestle) and toilet paper manufacturers Kimberly have been forecasting timely price increases. More importantly, half a century ago in the 1970s, the oil crisis triggered super inflation, the semiconductor is now known as the “new oil”, chip shortage has been about the economic future. Goldman Sachs has warned that the lack of “core” will turn into inflationary pressure, or the U.S. economic output shrinkage of up to 1%. Germany Fuchs car latest warning, the second quarter production decline than the first quarter of fear.
Food, around the world, such as the United States bacon, Mexican tortillas, Brazilian beef, Myanmar retail palm oil are price increases. The threat of food inflation has made some governments nervous, with Russia, one of the largest grain exporters, having ordered a freeze on some retail food price increases while curbing exports; Bolivia has temporarily banned beef exports to protect domestic supplies and limit prices. Even wealthy countries, where food accounts for a small percentage of people’s spending, may face price adjustments. In Europe, there is usually a six-month buffer between commodity price increases and store price increases, foreshadowing a tough situation in the next six months.
Furthermore, as the global push for a green economy pushes up demand expectations for the industrial metal, May copper futures prices rose 1.5% on Friday to close at $4.336 per pound, the highest since August 2011. Michael Cuoco, head of sales for the StoneX Group Metals and Bulk Materials Hedge Fund, said bluntly that a perfect storm is indeed brewing for copper.
It is worth noting that the current shock has affected the ranking of large countries. Brazil fell out of the top 10 in the global economic rankings last year, ranking only the 12th largest, and in 2019, it ranked ninth, becoming the only country to fall out of the top 10. The analysis points out that this South American “one brother” at least in 2026 will not return to the world’s top 10, mainly because the local epidemic is very serious, the world’s third highest confirmed cases, and can not close the city, the epidemic prevention failure makes the economy difficult to recover.
[Adverse market oddities: looking for investment playground Australia South Korea Margin]
The global epidemic has lasted for more than a year, far more than anyone expected last year, the new confirmed cases are still endless. By now, all economists in the market also believe that the world cannot return to 2019, all because of the epidemic-derived China and the United States fierce fighting, de-globalization, industrial chain restructuring, asset bubbles, wealth disparity, debt pressure and financial system weakness will only worsen the situation! So, is the world running out of investment opportunities? Perhaps Australia and South Korea can be the rare exceptions, so pay more attention!
According to foreign media statistics, Australia and South Korea are two of the “magic” global economies that have shown extraordinary resilience in minimizing the impact of the epidemic crisis, thanks to their close ties to China’s economic growth and their unique key strengths.
While the link between the two countries is not obvious – South Korea is a manufacturing powerhouse with skilled labor as a key advantage; Australia has extensive resource wealth – what they have in common is their exports to China, with South Korea accounting for over 25% of its total exports to China; Australia’s share of exports to China is a very high 43% and enjoys an irreplaceable position in key resources.
However, these levels of dependence on China do not give a broad picture of the two countries’ strengths, as Japan is also one of the largest exporters to China, but its economic performance remained sluggish during the epidemic. In other words, there are still other keys to becoming a “global playground.
Another common denominator, according to comprehensive market research, is the relative success of South Korea and Australia in controlling the epidemic. Both countries have largely blocked the spread of the new coronavirus (CCP virus) in their territories, South Korea’s cumulative confirmed cases are still under control so far, and Australia has at one point initiated a “travel bubble” with New Zealand, in contrast to other economies of comparable size, such as Japan, which is about to restart its embargo.
In this regard, independent economist Saul Eslake said that the two countries are performing wonderfully and are in the same time zone. He believes that there are 3 typical elements that drive economic growth, namely population, participation, and productivity. South Korea and Australia have at least one of these, with Australia having the first factor and South Korea having the third. Park Chong-hoon, an economist at Standard Chartered Bank in Seoul, said the two countries’ currencies tend to rise as market risk appetite heats up, with the Korean won moving more in line with the yuan.
In retrospect, the two countries do have a “close” economic relationship, as both are among the very few countries that avoided the 2009 financial tsunami that triggered a collective global recession, and the economic contraction last year was smaller than most other economies. South Korea is Australia’s fourth largest trading partner and the two sides have a free trade agreement in place since 2014.
It is worth noting that, as the South Korean economy contracted by only 1% last year, thus overpowering Brazil and Russia, into the world’s top 10 economies, becoming Asia’s “four brothers”, the market is estimated to maintain at least until 2026, the economy is expected to grow by 3.6% this year, mainly because of strong exports of semiconductors. As for the ranking after China and Japan’s Asian “three brothers” India, due to the recent epidemic out of control, so the U.S. banks frankly said the situation is increasingly worrying, if the country again to implement a month of national blockade, will make India’s gross domestic product (GDP) this year, a significant reduction of 1 to 2%. Australia is stable and maintained in the ranking of 13.
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