The global economy could be on the brink of a new commodity “supercycle” as governments prepare to use a green industrial revolution to kickstart growth following the coronavirus pandemic.

The price of commodities, such as energy and metals, have reached record highs in recent weeks despite the ongoing spread of Covid-19 and are expected to climb further as countries embark on plans for a green economic recovery.

Market experts, including US bank Goldman Sachs, believe the boom could echo the last “supercycle” in the early 2000s led by the sharp growth of emerging BRIC economies (Brazil, Russia, India and China).

“Covid is already ushering in a new era of policies aimed at social need instead of financial stability,” the US bank said. “This will likely create cyclically stronger, more commodity-intensive economic growth.”

Chris Midgeley, the head of analytics at S&P Global Platts, said “an unusual confluence” of global events had ignited a surge in commodity markets in recent months, but the trend was largely driven by growth in China.

Iron ore prices climbed to $176.90 a tonne shortly before Christmas, the highest since May 2011, and the market price for copper topped $8,000 a tonne for the first time in more than seven years. Global oil prices have climbed to 11-month highs of $55 a barrel with help from the Opec oil cartel.

Source: The Guardian