Emerging economies key to commodities boom, says BHP
September 19, 2005
Sydney - The emerging economies of Asia, South America, Africa and Russia are likely to drive world economic growth and commodity demand for decades to come, BHP Billiton chairman Don Argus said Monday.
"While global economic growth rates have slowed from the exceptionally high levels of 2004, the emerging economies remain buoyant, off-setting slowing industrial production growth in the OECD nations," Argus said.
"It's the emerging economics of Asia, South America, Africa and Russia that will continue to drive global growth, thereby providing a sound underpinning for commodity demand," he added in the Anglo-Australian group's annual report.
BHP Billiton, the world's largest diversified resources company, expected China to "remain a large and sustainable consumer of raw materials and resources over the coming decades," he said.
China now represents 12 percent of BHP Billiton's total sales but other areas of Asia were also likely to drive business growth, he said.
"Northeast Asia has acquired enormous economic power. Korea, Taiwan, China and Japan are influencing business decisions, trade flows, costs and pricing for most major companies around the world," Argus said.
"India continues to make economic progress, suggesting significant growth opportunities over the next decades."
Australian resources companies have benefited from record high commodity prices driven by China's demand for raw materials, with prices for iron ore rising by more than 70 percent from April.
"Commodity prices will inevitably ease from their highs as demand growth slows and new supply comes on stream although we continue to expect prices to remain high by recent historical standards," Argus said.
Argus said developing economies would still be subject to business cycles which would impact economic activity from time to time.
Chief executive Chip Goodyear said that while Europe remained the group's largest overall market, the pace of economic development in regions such as Asia made the situation fluid.
The company has started to look more seriously at other parts of the world that might follow the China growth story, he added.
Countries with rapidly growing middle classes such as India, Russia and Brazil are considered growing markets for raw materials produced by BHP Billiton, the company said in its report. - AFP
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