Commodity Prices and GDP Growth
33 Pages Posted: 16 Jun 2020
Date Written: May 22, 2020
This paper explores the extent to which commodity prices can predict GDP growth rates of various countries using indices of 27 commonly traded commodity futures. Commodity returns can strongly predict the next quarter’s GDP growth, while the basis shows a reasonable level of predictive power. Overall, commodity prices can be considered a leading indicator of economic growth; increasing commodity prices and basis values indicate a stronger future economy.
Keywords: GDP Growth; Commodity Prices; Basis; Predictability
JEL Classification: E23; E27; F43; G13
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