Falling Commodity Prices and Emerging Markets

Falling Commodity Prices and Emerging Markets
It has seemed for a while as if the internal markets in the emerging world would sustain at least a modicum of growth there. Unfortunately, the economies of these countries are, in most cases, heavily dependent on commodities. The decrease in world demand is driving the price of these commodities down. This decreases the foreign exchange coming in to the country. In many cases it also decreases the costs of subsidies the governments pay for food and energy.
The manufacturing sectors in these countries, in large part, make the cheap goods that are sold in Walmart and places like that. These stores are still doing well because people are being forced to shop more consciously. We see in the Economist that Brazil is not as detached from the rest of the world as was previously thought. This is from a macroeconomic perspective. A large part of Brazil’s economy is un-official. This part of the economy is not measured in the official numbers and a misleading opinion can be gained from looking at official numbers.
Home construction is the engine that drives consumer based economies. A home takes 3 to 6 months to build. This sector can stop or slow down really fast. Commercial construction and large condominium projects as seen in cities like Sao Paulo take years. Works in progress do not normally just stop. By the time a slowdown is felt in that sector, the economy has had time to recover.

David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com