Almeida’s Supernatural, the Market Elves, the Fairies of Confidence and the size of the stick in American interest will tell if the world’s central economies will enter recession in the second half of 2022.
But the world of big money out there is already nervous and having tantrums. In this situation, there is always more for us, more poor people and donkeys.
People think these subjects are esoteric or downright boring, but they define a lot of our little lives. More specifically, what matters to us is the price of commodities (things like food, minerals and oil), which the country sells in droves, and the exchange rate (the “dollar price”).
After a period in which we didn’t take full advantage of the rising tide of commodities over the last year and a half, we may now lose some benefit from the lower prices of these basic commodities.
At the high, which in theory benefits us, we had an expensive dollar, which is not usual in these situations, causing even more inflation. At low, we can lose extra income from commodities and still have an expensive dollar (R$ 5.38, this Tuesday, compared to the average of R$ 4.76 in April).
For now, what you can see in the rich world beyond the fog of suspicions of recession is the price of commodities falling somewhat since mid-June, in addition to consumption walking sideways or falling at least since March and recent stumbles in orders for the industry.
In dollars, relevant commodities are already priced lower than they were just before Russia’s invasion of Ukraine. In reais, often not or lower, thanks to the recent devaluation of the Brazilian currency.
The dollar has appreciated against almost all the relevant currencies in the world. In these comings and goings, the devaluation of the real is almost always greater, for reasons that do not fit in these lines (if anyone even knows the reason, to be frank). Add to that the sordid avacalhação of the government of the country and we have this real that is worth nothing, putting pressure on inflation.
It is also unclear how far this relative decline in commodities will go. In the event of a recession, the extent of the fall is not known. People who know the market and the economy have different opinions. It won’t be good and, besides, there is a risk of accidents.
Will a sharp rise in interest rates make debt excesses critical? Will big people break? Given that risk, will central banks hit the gas accelerator? Etc.
For now, the people who operate in the commodity markets are slipping away. It could be because of less purchases and also less speculation and use of contracts with these commodities as a “hedge”, protection against inflation.
Prices are still salty and the changes are not all “structural”, dependent on the outlook for economic growth — the weather has helped and the forecast for crops of basic grains has improved a bit, for example.
According to the latest available and comparable data (end of June), the price of a barrel of oil is about 36% higher than at the end of 2021. 50%.
The summary of this opera is that the world economy will move slower, if not back, subject to thunderstorms and lightning. That means cheaper commodities (exports will yield relatively less) and other indirect effects of global warming around here. The dollar is on the rise all over the world and who knows what extra blow national policy can give to the exchange rate.
Yes, our little growth has held up so far. But it’s best to look out the window to see the weather closing in outside.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
