The price of copper is falling, which is bad news for the global economy, according to macroeconomist Edin Mujagic. “The price of copper moves with the global economy, so it’s a good indicator of what’s about to happen to the global economy.”
Especially since “just name something, otherwise it contains copper,” explains Mujagic. According to him, this also means that the demand for copper will increase as the economy improves, which means that the price of copper will also increase. “Copper is therefore sometimes referred to as the only metal with a PhD, because it has ‘continued’ for that world economy,” says the macroeconomist.
“That’s why copper is sometimes called the only metal with a PhD, because it’s ‘studied’ for that global economy”
However, there has been quite a drop in the price of copper in recent months: copper has lost more than 25% in value. “Usually that means that copper demand isn’t working well for a while, and that’s probably the result of a world economy not working well for a while.”
‘momentarily’
However, Mujagic points out that this is a decline, as he thinks structural demand for copper will increase. He especially given the transition from fossil fuel to green. ‘A lot of copper will be needed for this, so the medium to long-term outlook for copper – and therefore for the global economy – is good. But if we look at the here and now and the near future, the copper price is not pointing in the right direction.’ On the contrary, Mujagic argues. The drop in the price of copper would indicate that everything in the world is not going well.
Oil
However, he thinks copper is just a bit of a shaky basis for economic forecasts, and so Mujagic thinks oil prices should also be considered. “Even though we make a lot of things with copper, these things often need oil to do something,” he points out.
According to Mujagic, the price of oil has undergone two major developments in recent weeks. On the one hand, OPEC and non-OPEC countries have agreed to cut oil production. “That means less oil is coming to the market, which means the price will go up,” he says. And the price has reacted accordingly. Even if it didn’t take long.’
New meeting
After a second meeting of OPEC+ countries a few days ago, Saudi Arabia, as a major producer, has decided to scale back production as well. “As a result, the price rebounded and then fell,” concludes Mujagic, and believes that this can be seen as a confirmation of the picture provided by the copper price. ‘The global economy is not doing well.’
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
