{
  "title": "The Challenge of Moderate Commodity Prices in Latin America",
  "publication": "IMF Blog, March 25, 2019",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2019/03/25/10841",
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  "summary": "Title: The Challenge of Moderate Commodity Prices in Latin America",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Title: The Challenge of Moderate Commodity Prices in Latin America\n- Author: Christian Bogmans\n- Date: March 25, 2019\n- Core message: Stable and moderate commodity prices imply that Latin America and the Caribbean cannot rely on commodity-driven growth to the same extent as in the past and must pursue alternative sources of inclusive growth."
    },
    {
      "heading": "Commodity dependence",
      "content": "- The region is rich in fertile lands, mineral ores, and oil, natural gas and coal deposits.\n- Leading exports by country examples:\n  - Coffee: Brazil, Colombia, Central America\n  - Copper: Chile, Peru\n  - Iron ore: Brazil\n  - Oil and gas: Bolivia, Colombia, Ecuador, Mexico, Trinidad and Tobago, Venezuela\n  - Soybeans: Argentina, Brazil, Uruguay\n- Because the region’s economies rely heavily on exporting commodities:\n  - Economic activity, government revenue, and current account balances are susceptible to commodity price shocks.\n- Previous IMF research: growth in Latin America is highly correlated with commodity price changes.\n- External influences and scenarios:\n  - Given China’s large weight in commodity markets, a US-China trade deal could lead to a rebound in commodity prices.\n  - The rebound would benefit the region’s energy and metal exporters, but not necessarily the region’s agricultural exporters, which have benefitted from recent trade tensions through a premium on the price of their soybeans.\n  - The ongoing El Niño phenomenon—the climate pattern of ocean water warming—could hurt agricultural exporters, but higher food prices could partly offset this effect."
    },
    {
      "heading": "Regional impact",
      "content": "- The impact of commodity price shocks differs across countries depending on the composition of their commodity exports and imports.\n- Analytical tool: commodity terms-of-trade indices provide the ratio of average commodity export prices to average of commodity import prices.\n  - This index captures which countries would benefit and which would suffer from a specific change in commodity prices.\n  - Example: when oil prices fall as in late 2018, net oil importers such as Chile and Uruguay benefit, while net oil exporters such as Colombia and Venezuela suffer.\n- Previous studies have found:\n  - A rise in the commodity terms-of-trade boosts economic growth temporarily.\n  - This effect is particularly evident in economies with large commodity exports as a percentage of GDP.\n  - Growth returns to its pre-shock level once investment and consumption have adjusted to the higher terms-of-trade level."
    },
    {
      "heading": "The way forward — findings and policy priorities",
      "content": "- Findings:\n  - The short-lived rise in commodity prices from early-2016 to mid-2018 helped boost growth in Latin America and the Caribbean, particularly in the Andean countries.\n  - The outlook of stable prices indicates that commodity prices are unlikely to be a significant growth engine for the region in the coming years.\n- Key policy priorities to accelerate inclusive growth:\n  - Further opening to trade and foreign direct investment\n  - Streamlining regulations in the goods and labor markets\n  - Promoting competition\n  - Investing in infrastructure and education\n  - Preserving or expanding well targeted social programs\n\nSource: The Challenge of Moderate Commodity Prices in Latin America — Christian Bogmans, March 25, 2019.\n\n---\n\n\n References\n\n- indices\n- studies\n\nSource: https://www.imf.org/en/blogs/articles/2019/03/25/10841"
    }
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    "Authors: Christian Bogmans",
    "Published: March 25, 2019",
    "Title: The Challenge of Moderate Commodity Prices in Latin America",
    "Author: Christian Bogmans",
    "Date: March 25, 2019",
    "Core message: Stable and moderate commodity prices imply that Latin America and the Caribbean cannot rely on commodity-driven growth to the same extent as in the past and must pursue alternative sources of inclusive growth.",
    "The region is rich in fertile lands, mineral ores, and oil, natural gas and coal deposits.",
    "Leading exports by country examples:",
    "Because the region’s economies rely heavily on exporting commodities:",
    "Previous IMF research: growth in Latin America is highly correlated with commodity price changes.",
    "External influences and scenarios:",
    "The impact of commodity price shocks differs across countries depending on the composition of their commodity exports and imports.",
    "Analytical tool: commodity terms-of-trade indices provide the ratio of average commodity export prices to average of commodity import prices.",
    "Previous studies have found:",
    "Findings:",
    "Key policy priorities to accelerate inclusive growth:",
    "[indices](https://www.imf.org/en/Research/commodity-prices)",
    "[studies](https://www.imf.org/en/Publications/REO/WH/Issues/2017/02/01/Rising-Challenges)"
  ],
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