Why the Downswing of Global Economies is not as Critical as it Seems

Crude oil futures are currently down more than 17% from when the commodity peaked in May. Such a considerable decrease may be attributed to ongoing fears of a second recession, yet the fall of prices themselves is as good of an antidote as anything else to prevent the recession from happening. Decreases in commodity futures can be potentially very beneficial, and policy makers should always weigh on all the pros and cons of the markets before taking reversal action.

The latest protracted decrease in commodity futures has finally put an end to economists and buyers not being on the same page. Though economists have been growing more and more anxious over the state of global markets, crude oil continued to rise until only recently; and despite its latest downswing, the commodity still has a long way to go before it can be deemed as critical. Brent crude oil futures in particular are a staggering 32% higher than they were last year.

It seems to be increasingly clear that the situation is nowhere near as grave as one might think. Even though developed economies have suffered somewhat this year, strong results from several emerging nations did more than enough to keep the markets in good shape.

It is strange to listen to so many analysts and economists bemoan the second coming of the recession when fuel commodities around the globe have posted higher over the past 12 months than they have the year before.

Despite the fact that commodity futures have slipped, all it really signifies is that more money will flow into the wallets of U.S. buyers, which will in turn ease the stress of central banks in developing economies and reverse the markets’ losing streak.

To view this video you must have IE9 or better.