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Minerals Exporters Seem Caught In A Deflationary Cycle


Economic Trends

MINERALS EXPORTERS SEEM CAUGHT IN A DEFLATIONARY CYCLE

The prices of key industrial commodities such as copper and oil seem to be headed even lower, observes economist A. Gary Shilling. Both are produced by financially weak countries with huge foreign debts--such as Zambia and Peru and the OPEC nations. "As the prices of these commodities fall," notes Shilling, "producers find they must turn out even more to service their foreign debts." The upshot is a vicious deflationary cycle, where falling prices spark greater output and even lower prices.GENE KORETZ


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