The economist nicknamed “Dr. Doom” who correctly predicted the 2008 global financial crisis offered some positive news for mining in a 2014 outlook piece published by The Project Syndicate.
Nouriel Roubini, a professor at NYU’s Stern School of Business and a senior economist for the White House during the Clinton Administration, believes that economic growth will pick up this year in both developed economies and emerging markets.
Of particular relevance to mining, Roubini said that emerging markets will grow faster than they did in 2013, close to 5 percent year on year, due to several factors including the fact that “[b]risker recovery in advanced economies will boost imports from emerging markets.” That compares to an annual growth rate for advanced economies approaching 1.9 percent.
He named South Korea, the Philippines, Malaysia, Poland, the Czech Republic, Chile, Colombia, Peru, Mexico, Kenya and Rwanda, as among the better-performing emerging markets due to their fewer “macroeconomic, policy and financial weaknesses.” Developing countries expected to remain fragile in 2014 include India, Indonesia, Brazil, Turkey, South Africa, Hungary, Ukraine, Argentina, and Venezuela.
Looking at two of the biggest factors for commodities, quantitative easing and Chinese economic growth, Roubini was sanguine, noting that the Fed’s exit from QE will be slow, and that policy reforms in China will attenuate the risk of a hard landing. He predicted China will maintain an annual growth rate higher than 7 percent in 2014.
On the potential for so-called “tail risks”, referring to low-probability, high-impact shocks such as a Eurozone implosion, Roubini described such threats as “far more subdued” than in previous years.
In his characteristic gloomy style, though, Roubini left open the possibility that it could all go horribly wrong, noting for example that China’s medium-term prospects “remain worrisome” and Europe’s “fundamental problems remain unresolved”:
“In sum, the global economy will grow faster in 2014, while tail risks will be lower,” he wrote. “But, with the possible exception of the US, growth will remain anemic in most advanced economies, and emerging-market fragility – including China’s uncertain efforts at economic rebalancing – could become a drag on global growth in subsequent years.”