The US economy is showing tentative signs of stabilization, and the first quarter of 2009 showed some contraction in the recession.But that doesn’t mean the downturn is over—the US economy is unlikely to see outright growth until late this year…if then.
But there’s growth in emerging markets.The Chinese economy will slow this year but will still grow around 8%.The latest reading from the Chinese Purchasing Managers Index suggests the nation’s economic resurgence is underway.
This bodes well for commodity and, in particular, energy demand.China and the emerging markets have been key drivers for oil demand and prices in recent years. China has been cutting deals and lending money to key global players to ensure supplies.
There are three energy markets (oil suppliers) likely to see strong growth this year:Brazil, Mexico and Iraq.These are also emerging market countries.Brazil, in particular, is a compelling growth story.Its deepwater fields may be tough to produce, but they’re the largest reserves discovered anywhere in the world in decades.Brazil is also signing a multiyear oil production contract with China.
In case you haven’t noticed, the price of oil has risen significantly since Jan 1.Much of the reason lies in the weak US dollar.But, that’s another story.
Investors may be well served over the next few years if they look at exchange traded funds (ETFs) that have diversified holdings in emerging markets & in natural resources (oil & other commodities).Holding natural resource investments could be a hedge against future inflation that could develop as economies improve.
