Metals prices have declined while energy and food prices have edged up. The IMF’s Primary
Commodities Price Index is unchanged from March 2013, with declines in metal prices offset
by small gains in food and energy prices of 1 and 2 percent, respectively.
The steep fall in metal pricesowes much a continuing rise in metals mine supply from large investments in recent years and some signs of a slowing real estate sector in China.
Oil demand has slowed particularly in China, India and the Middle East. Although coal and natural
gas prices have fallen , oil spot prices have remained above US$ 105 a barrel, reflecting various supply outages and renewed geopolitical concerns in the Middle East and North Africa. In addition
new pipeline infrastructure in the U.S. has allowed surplus crude in the mid-continent to reach
coastal refineries and U.S. crude prices to rise. Elevated crude oil prices have played a role in keeping food prices relatively high because energy is an important cost component.Despite
slowing growth demand for food has remained high in China, and is particularly reliant on world markets for oilseeds, imports accounted for nearly 60% of total oilseeds consumption in 2013.
A slowdown in economic activity in emerging markets is a driver of commodity price declines.
The correlation between growth in commodity prices and growth in macroeconmic activity in emerging markets is very high;the correlation between the first principal components of the two is
0.80. Moreover declines in economic growth lead to substantial declines in commodity price
growth for several months.
Commodity price declines can have important and disparate effects on trade balances across and
within regions. The estimated direct(first-Round) effects on trade balances from commodity
price declnes of the magnitude seen during the past six months can be important for some regions.
As shown in Table 1, a 30 percent decline in metals prices and a 10 percent decline
in energy prices would broadly lead to deterioration in balances for the Middle East,
economies in the Commonwealth of Independent States, Latin America, and Africa, offset by
improvements in Asia and Europe. Within regions, the impacts are heterogeneous—for
example in Africa, the Western Hemisphere and the Middle East.
The IMF has estimated that the impacts of a slowdown in Chinese growth of 10% during the
previuos decade to an average 71/2% over the coming decade. The calculations are the
declines in net revenues(as a percentage of GDP, adjusted for Purchasing Power Parity) for various commodity exporters as a result of lower Chinese demand. For example, Mongolia's GDP level in
2025 is estimated to be about 7% lower than otherwise,primarily as a result of slower chinese demand for coal,iron ore and copper.
To the degree that the chinese slowdown is anticipated in forward-looking prices, some of this
slowdown may already have begun to affect exporters.Nevertheless this chart provides an approximate and illustrative ranking of countries that, in the absence of policy responses or offsetting favorable shocks, might be somewhat vulnerable in the short run to chinese demand
rebalancing. In addition to oil exporters, countries that appear vulnerable by this metric include
Australia,Brazil,Chile and Indonesia.
Source: Commodity Market Review.
World Economic Outlook . October 2013
International Monetary Fund
Commodities Price Index is unchanged from March 2013, with declines in metal prices offset
by small gains in food and energy prices of 1 and 2 percent, respectively.
The steep fall in metal pricesowes much a continuing rise in metals mine supply from large investments in recent years and some signs of a slowing real estate sector in China.
Oil demand has slowed particularly in China, India and the Middle East. Although coal and natural
gas prices have fallen , oil spot prices have remained above US$ 105 a barrel, reflecting various supply outages and renewed geopolitical concerns in the Middle East and North Africa. In addition
new pipeline infrastructure in the U.S. has allowed surplus crude in the mid-continent to reach
coastal refineries and U.S. crude prices to rise. Elevated crude oil prices have played a role in keeping food prices relatively high because energy is an important cost component.Despite
slowing growth demand for food has remained high in China, and is particularly reliant on world markets for oilseeds, imports accounted for nearly 60% of total oilseeds consumption in 2013.
A slowdown in economic activity in emerging markets is a driver of commodity price declines.
The correlation between growth in commodity prices and growth in macroeconmic activity in emerging markets is very high;the correlation between the first principal components of the two is
0.80. Moreover declines in economic growth lead to substantial declines in commodity price
growth for several months.
Commodity price declines can have important and disparate effects on trade balances across and
within regions. The estimated direct(first-Round) effects on trade balances from commodity
price declnes of the magnitude seen during the past six months can be important for some regions.
As shown in Table 1, a 30 percent decline in metals prices and a 10 percent decline
in energy prices would broadly lead to deterioration in balances for the Middle East,
economies in the Commonwealth of Independent States, Latin America, and Africa, offset by
improvements in Asia and Europe. Within regions, the impacts are heterogeneous—for
example in Africa, the Western Hemisphere and the Middle East.
The IMF has estimated that the impacts of a slowdown in Chinese growth of 10% during the
previuos decade to an average 71/2% over the coming decade. The calculations are the
declines in net revenues(as a percentage of GDP, adjusted for Purchasing Power Parity) for various commodity exporters as a result of lower Chinese demand. For example, Mongolia's GDP level in
2025 is estimated to be about 7% lower than otherwise,primarily as a result of slower chinese demand for coal,iron ore and copper.
To the degree that the chinese slowdown is anticipated in forward-looking prices, some of this
slowdown may already have begun to affect exporters.Nevertheless this chart provides an approximate and illustrative ranking of countries that, in the absence of policy responses or offsetting favorable shocks, might be somewhat vulnerable in the short run to chinese demand
rebalancing. In addition to oil exporters, countries that appear vulnerable by this metric include
Australia,Brazil,Chile and Indonesia.
Source: Commodity Market Review.
World Economic Outlook . October 2013
International Monetary Fund
