Beginning in 2008, nations spent trillions of dollars in fiscal stimulus in response to the Global Financial Crisis (GFC). How are nations planning to spend their way out of recession once the COVID-19 pandemic subsides?

A huge chunk of this spend from 2008 went into infrastructure construction to boost local economies, which had a direct impact on metals prices. Iron ore, nickel and copper are just a few that rebounded strongly in the ensuing period.

In 2020, governments are already talking about spending big on infrastructure once the pandemic subsides. While many unknowns remain, this would be important as economies look to long-term recovery.

“Once the recovery happens and we are past the pandemic phase, for advanced economies, it would be essential to undertake a broad-based fiscal stimulus,” the International Monetary Fund’s Gita Gopinath says.

“And this would be even more effective if it were coordinated across all the advanced economies across the world.”

This “coordinated effort” could have a very tangible impact on demand for commodities like iron ore, coal, base metals and battery metals (lithium, cobalt, graphite).

So what do we know so far?



China is ostensibly the first country to start recovery from virus-led economic shutdowns, barring any secondary ‘waves’.

In 2009/2020 China spent huge amounts to keep its economy — and its key import partners, like Australia — growing through the GFC. This time may be different, according to analysts.

While the country has announced some measures like extended electric vehicle subsidies which should help battery metals demand, an orderly recovery rather than a growth surge is more likely this time, said ANZ Research in March.

“At this stage, there are few signs the Chinese government will deliver a huge stimulus plan to boost the economy,” it said.

“ANZ Research believes the government will adopt a targeted approach as they do not want to repeat the side-effects of the massive stimulus package in 2009, such as rapid debt growth and over-capacity issues.”



German Finance Minister Olaf Scholz said when the pandemic subsided the government planned a stimulus package “that advances the nation technologically and helps the economy’s move toward climate neutrality”.

To make an impact, a green stimulus program — which could boost demand for battery metals — should be of the order of 100 billion euros ($170bn), said Patrick Graichen, executive director of Berlin think tank Agora Energiewende.

READ: Have the next crop of battery metals producers been oversold?



In the US, that initial $US2 trillion rescue package could be just the beginning.

A $1 trillion plan focused on infrastructure spending could help protect the US economy from the impact of the coronavirus outbreak, Senate Appropriations Committee chairman Richard Shelby said in March.

Then Trump said this:

… which received support from Democrat House Speaker Nancy Pelosi, who wants to move forward with an infrastructure proposal after the House’s planned return on April 20.

“I think we come back April 20, God willing and coronavirus willing, but shortly thereafter we should be able to move forward,” she told reporters.