The expanding urban middle class in emerging economies is having a major impact on a wide range of commodities. Whether it is travel, housing or protein, consumption levels in major emerging markets are currently fractions of those in advanced economies.
With convergence still a long way off, the demand for commodities can be expected to remain robust for some time. Based on the experiences of Japan in the 1960s and Korea in the 1980s, emerging Asia’s energy and metals intensities should gain momentum in coming years.
Commodity prices have been falling lately, of course, and they may continue to do so as the economic recovery sputters through the balance of 2011. And over time there will be a supply response that will ease prices for many goods, if not necessarily as quickly as we might like (and perhaps not at all in the case of oil, except at much higher prices).
But reading Carney’s remarks – and looking at a commodity index chart covering the past five years (see right) – says we shouldn’t get too used to the good news of the past month.