World economies, with the mighty exception of the US, have been giving worrying signals of a major slow-down. All international finance agencies have been revising their growth forecasts, lowering their predictions
This being the case, commodity prices have seen sharp falls. The price for Brent Crude oil went down to $85.78 in late October, down by 25.5 percent from the mid-June price. The fall posted by oil prices between October and November was about 12 percent. The Thomson Reuters Commodity index also tumbled, posting a 15.7 percent fall between June and October and a 7.2 percent fall in October. The fact that oil prices are hovering at their lowest in four years, in spite of falling commodity prices and conflict in the Middle East, is fostering pessimism regarding the global economy.
China's growth slowest since 2009
European economies are on the edge of stagnation, running the risk of falling into deflation. Mutual embargoes between the West and Russia are taking a tall both on European and Russian markets. Meanwhile, the slow-down in China’s economy is placing pressure on other countries’ economies. China's gross domestic product grew 7.3 percent in the third quarter from a year earlier, official data released on Oct.21 showed, which was the weakest rate since the first quarter of 2009. China, which grew at a steady 10.2 percent in the three decades before 2011, faces the risk of failing to meet growth targets for the first time. The slow-down in China’s growth rate can hurt US, European and Japanese exporters, as well as those in Asia, Latin America and the Middle East; markets from where China imports commodities. The highest volume of exports to China comes from Australia (27 percent), followed by South Korea (25 percent), Japan (18 percent), Germany (8 percent), the US (7 percent), Brazil (19 percent), Indonesia (14 percent) and Saudi Arabia (12 percent). These will be the hardest hit countries by China’s slowdown.
The increasing slowdown in global growth is bringing down commodity and oil prices. But how good is that for Turkey’s economy? A most obvious outcome for Turkey is that the lower prices will work to narrow Turkey’s current account deficit. The country’s yearly energy imports – including oil purchases – are about $60 billion. Economists say that Turkey’s energy spending can fall to as low as $48 billion due to falling oil prices. Turkey will likely be the most positively affected country by the new oil price situation, as the country imports about 74 percent of the energy it consumes. However, economists note that the same global circumstances that are causing oil prices to fall are also impacting Turkey’s economy negatively; as the same conditions also pressure Turkish exports. The state of the global economy is also making it hard for investors at home to find foreign financing, and it is also negatively affecting the tourism industry. Analysts say that all these will likely outstrip the benefits that might arise from falling oil prices.
