Managing Global Growth Risks and Commodity Price Shocks: Vulnerabilities and Policy Challenges for Low-Income Countries: Vulnerabilities and Policy Challenges for Low-Income Countries

Departmental Papers, July 10, 2012

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Managing Global Growth Risks and Commodity Price Shocks: Vulnerabilities and Policy Challenges for Low-Income Countries: Vulnerabilities and Policy Challenges for Low-Income Countries

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Bibliographic details

• Authors: Stefania Fabrizio
• Published: July 10, 2012
• Series: Departmental Papers
• DOI: https://doi.org/10.5089/9781616353773.087

Summary

• As part of its work to help low-income countries manage volatility, the IMF developed an analytical framework for assessing vulnerabilities and emerging risks that arise from changes in the external environment.
• This paper draws on the results of the first vulnerability exercise for low-income countries conducted by IMF staff using this new framework.
• Focus areas:
  • Risks of a downturn in global growth.
  • Risks of further global commodity price shocks.
  • Related policy challenges for low-income countries.
• Chapters:
  • Review recent macroeconomic developments, including the spike in global commodity prices in early 2012.
  • Assess current risks and vulnerabilities, including how a sharp downturn in global growth and further commodity price shocks would affect low-income countries.
  • Discuss policy challenges in the face of these risks and vulnerabilities.

Key findings and assessments

• The paper uses a newly developed analytical framework to identify vulnerabilities and emerging external risks for low-income countries.
• Particular emphasis is placed on:
  • The potential impact of a sharp downturn in global growth on low-income countries.
  • The potential impact of further global commodity price shocks on low-income countries.
• Recent macroeconomic development highlighted:
  • A spike in global commodity prices in early 2012.

Policy challenges and implications

• The paper discusses policy challenges low-income countries face in managing:
  • Volatility originating from global growth downturns.
  • Volatility arising from commodity price shocks.
• Policy discussion covers fiscal and monetary implications given exposure to commodity price and global demand risks.

Subjects and keywords

• Subject: Commodity price shocks, Commodity prices, Fiscal policy, Fiscal space, Food prices, Inflation, Prices
• Keywords: Asia and Pacific, commodity price, Commodity price shocks, Commodity prices, DP, DPPP, Fiscal space, Food prices, fuel price, Global, headline inflation, IMF staff estimate, Inflation, Middle East, Middle East and Central Asia, monetary policy, nominal exchange rate, price shock, real interest rate, Sub-Saharan Africa