from the International Monetary Fund
Commodity prices have declined sharply over the past three years, and output growth has slowed considerably among those emerging market and developing economies that are net exporters of commodities. A critical question for policymakers in these countries is whether commodity windfall gains and losses influence potential output or merely trigger transient fluctuations of actual output around an unchanged trend for potential output.
The analysis in this chapter suggests that both actual and potential output move together with the commodity terms of trade but that actual output comoves twice as strongly as potential output. The weak commodity price outlook is estimated to subtract almost 1 percentage point annually from the average rate of economic growth in commodity exporters over 2015 – 17 as compared with 2012 – 14. In exporters of energy commodities, the drag is estimated to be larger – about 2¼ percentage points on average over the same period. The projected drag on the growth of potential output is about one-third of that for actual output.
After rising dramatically for almost a decade, the prices of many commodities, especially those of energy and metals, have dropped sharply since 2011 (Figure 2.1). Many analysts have attributed the upswing in commodity prices to sustained strong growth in emerging market economies, in particular those in east Asia, and the downswing to softening growth in these economies and a greater supply of commodities.1 Commodity prices are notoriously diffi cult to predict, but there is general agreement among analysts that they will likely remain low, given ample supplies and weak prospects for global economic growth. Commodity futures prices also suggest that, depending on the commodity, future spot prices will remain low or rebound only moderately over the next five years.
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Source: http://www.imf.org/external/pubs/ft/weo/2015/02/pdf/c2.pdf
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