Commodities Supercycle

The 2004-2012 global commodities cycle helped lift Indonesia from the 1997-1998 economic contraction as a result of the Asian financial crisis. Will it happen again?

KOMPAS/HERU SRI KUMORO

Ari Kuncoro

Financial institution Goldman Sachs recently issued an interesting statement that the Covid-19 pandemic had triggered a new major cycle of global commodities. The Bloomberg commodity index rose 11 percent year-on-year in March 2021, while the cumulative gain reached 40 percent in the last 52 weeks.

The trend is similar to the situation after the Asian financial crisis in 1998-1999. At that time, Indonesia was badly affected by the delayed demand. During the crisis, people withheld spending except on basic commodities such as food and clothing. People also refrained from spending on durable goods and self-actualization, such as travel.