Roubini : Fall in commodity prices is a signal that investors in financial markets are worried about the global economic growth

Nouriel Roubini : Fall in commodity prices is a signal that investors in financial markets are worried about the global economic growth. It certainly is a growth scare, but this growth scare could be more significant. The latest economic data suggests continued recession in the periphery of the Eurozone. US growth is slowing down sharply because of the weakness in the core of the Eurozone (recession in France, a slowdown in Germany), and the affects of fiscal drag in the US between tax increases and Spanish sequesters. There has been deflation in Japan and we do not know whether Abenomics is going to succeed. The United Kingdom is on the verge of a triple dip recession. Until recently at least emerging markets were going stronger but now the latest economic data from China suggests a slowdown. A similar slowdown has occurred in other BRIC countries. Economic growth in India, Russia, Brazil and South Africa has been disappointing. So, while lower commodity prices could look beneficial for countries that are importing oil, energy, food and raw materials, however, if the reason behind the sharp fall of commodity prices is more than a growth scare, then the affects of that slowdown on India are more important than the benefits of lower commodity prices. If the fall in commodity prices is the result of a weakness in global economic growth, then it is on net a negative for commodity importing countries like India.