2020 has been a watershed year for the global economy as it underwent its ‘biggest peacetime disruption for centuries’ due to COVID-19, said Deloitte Access Economics in its latest July Commodities Blog.

While the magnitude of the COVID-19 pandemic has trimmed nearly 5 per cent off global economic growth, according to IMF revised estimates, some countries have fared better than others.

Australia with its rich diversity of commodities and quick public health response to COVID-19 is one country that is doing relatively well.

Australia’s Q1 economic growth, or GDP figure, was down just 0.3 per cent, a relatively minor dip by international standards.

The US economy is expected to shrink by 8 per cent this year, Italy’s to drop by 12.8 per cent, and the UK economy to decline by 10 per cent, said Deloitte.

“Commodity producing countries who have managed the outbreak effectively have enjoyed windfall gains at the expense of those who have not,” said  Deloitte director James Campbell-Sloan and colleague Nye Hill.

Australian iron ore producers have been winners this year, benefiting from windfall prices of just over $US100/t for their product supported by supply disruption in Brazil.

Fortescue Metals Group (ASX: FMG) has enjoyed a near 50 per cent rise in its share price since the start of this year to $16.15 Thursday, and Mineral Resources (ASX: MIN) has done almost as well over the same period, its shares climbing 44 per cent to $23.83.

Smaller companies in the iron ore space may benefit from the tailwinds of larger producers.

Upside for gold

Safe haven gold has also done well, its price rising toward a 10-year high.

And Deloitte thinks there could be further upside to gold prices.

“Continued central bank activity, ongoing civil unrest in the United States and geopolitical tensions everywhere from Libya, Hong Kong, the Himalayas to the Korean peninsula have the potential to add fuel to the current gold price rally,” it said in the blog.

Tropicana gold mine owner IGO (ASX: IGO) was trading at $5/share Thursday, up from a recent low of $3.40 in mid-March.

‘Risk on’

Early signs of economic recovery are starting to appear, said Deloitte.

They include investors switching out of the relative safety of the US dollar and US assets to more riskier currencies, as they bet on improving times.

Since March, asset prices have risen broadly on a wave of central bank and government support, and commodity and equity prices are beginning to shine.

Aluminium and copper prices were some of the heaviest casualties in commodity markets in the early stages of the pandemic, but have started to recover.

Spot prices for aluminium and copper are up 16 and 40 per cent, respectively, since their March and April lows, according to London Metal Exchange data.