Commodity prices signal softer global growth ahead

Doha, Qatar: After a turbulent first half of 2025 marked by sharply elevated US tariff uncertainty following President Trump s sweeping Liberation Da...

Doha, Qatar: After a turbulent first half of 2025 marked by sharply elevated US tariff uncertainty following President Trump’s sweeping “Liberation Day” trade measures, the global economy is adjusting to a more restrictive trade environment, leaving economists and investors increasingly cautious, stated QNB in it's weekly commentary.

Despite the initial rounds of US trade deals not fully addressing policy uncertainty, commodity prices provide more concrete indicators of underlying global demand, inflationary pressures, and investor sentiment. Historically reliable as real-time barometers, recent commodity price trends are now signalling moderating growth prospects and lower risks of runaway inflation dynamics ahead. 

Three factors support this position. First, the overall performance of commodity indices remains well below their cyclical highs from May 2022, while trading in a relatively tight range since the beginning of 2025. This stabilisation challenges both extremes of the macro narrative – neither pointing to untamed nominal growth re-acceleration nor to a more significant slowdown or recession. 

In fact, the absence of renewed volatility or major price spikes in cyclical commodities (energy and industrial metals) reinforces the ongoing disinflationary trend, despite the sharp depreciation of the USD and the risk of short-term inflation in the US due to the new tariffs. At the same time, steady year-to-date price levels imply underlying resilience in global demand, especially for construction and industrial activity. 

Notably, base metals (copper, aluminium, lead, nickel, tin and zinc) have posted some gains this year, reflecting optimism around a growth acceleration in emerging technologies and in Asia, particularly with regards to electric vehicles, AI, and China.