Geoeconomic Fragmentation and Commodity Markets
IMF Working Papers, October 3, 2023
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- Geoeconomic Fragmentation and Commodity Markets
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Bibliographic details
- Authors: Jorge A Alvarez, Mehdi Benatiya Andaloussi, Chiara Maggi, Alexandre Sollaci, Martin Stuermer, Petia Topalova
- Published: October 3, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400252426.001
Overview
- Research objective: Study the economic impact of fragmentation of commodity trade.
- Scope: 48 most important energy, mineral and agricultural commodities.
- Framework: Partial equilibrium model to assess vulnerability of commodity markets to trade disruptions.
- Context: Commodity trade fragmentation has accelerated since Russia’s invasion of Ukraine.
- Hypothetical scenario analyzed: Segmentation of the world into two geopolitical blocs.
Dataset and Methodology
- Novel dataset assembled of production and bilateral trade flows for 48 commodities.
- Modeling approach: Partial equilibrium framework to evaluate price responses, price volatility, and economic surplus effects under trade disruptions.
Key Findings
- Trade fragmentation could cause large price changes and price volatility for many commodities.
- Mineral markets critical for the clean energy transition and selected agricultural commodity markets appear among the most vulnerable in the hypothetical two-bloc segmentation.
- Trade disruptions produce heterogeneous impacts on economic surplus across countries.
- Global outcome: Due to offsetting effects across commodity producing and consuming countries, surplus losses appear modest at the global level.
Vulnerable Markets and Risks
- Minerals tied to the clean energy transition are highlighted as particularly vulnerable.
- Selected agricultural commodity markets are also among the most vulnerable under the two-bloc segmentation scenario.
- Vulnerability manifests through large price changes and increased price volatility.
Economic Impacts
- Heterogeneous country-level effects: producing countries and consuming countries experience offsetting surplus changes.
- Net global effect: surplus losses are characterized as modest despite large market-specific price and volatility impacts.
Publication and Metadata Highlights
- Authors: Jorge A Alvarez; Mehdi Benatiya Andaloussi; Chiara Maggi; Alexandre Sollaci; Martin Stuermer; Petia Topalova
- Publication date: October 3, 2023
- Series: IMF Working Papers, Working Paper No. 2023/201
- Pages: 78
- DOI: https://doi.org/10.5089/9798400252426.001
- ISBN: 9798400252426
- ISSN: 1018-5941
IMF Working Paper "Geoeconomic Fragmentation and Commodity Markets" by Jorge A Alvarez, Mehdi Benatiya Andaloussi, Chiara Maggi, Alexandre Sollaci, Martin Stuermer, and Petia Topalova (October 3, 2023).
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- Working Paper