2017 may bring decent growth - January 29, 2017

2017 may bring decent growth

Most commodities had a great 2016, base metals, oil and gas having an excellent time. Some of these commodities rose more than 50% in a year. This was good for many, but 2017 may bring nice growth as well.

According to Visual Capitalist’s new chart the biggest winners were iron ore and zinc among the base metals. Iron managed “its first calendar gain in four years”, while major zinc mines got shut down, therefore supply changed and prices went up. Oil and gas also had major comebacks this year, as we reported about them as well.

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In 2017, it’s still good to keep an eye on oil, as prices may go even higher with OPEC’s agreement. What’s more, these rising commodity prices may bring an end to the era of deflation and would make inflation around 2-3%, a rate preferred by most central banks. This may further lead to the rise of other commodities, like silver and gold.

But changes may affect other segments as well. Governments seem to be less strict about fiscal politics. We know that Donald Trump wishes to soften up banking regulations, but the same is true for European countries. This may help economic growth a lot.

Softer regulations should lead to more lending on the banking sector’s side. This is not only good for the industry, but for the people as well. For a while, people deeply disliked loans but now this feeling is started to dissipate. This change, combined with rising wages, could easily lead to higher domestic consumption, which is again, good for economic growth.

All in all, if there’s no unexpected global economic shock this year, rising commodity prices, a small but steady inflation and higher domestic consumption may all lead to a decent economic growth in 2017, which would be good for everyone.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving high returns on their investments.