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After the Boom–Commodity Prices and Economic Growth in Latin America and the Caribbean

Bertrand Gruss

No 2014/154, IMF Working Papers from International Monetary Fund

Abstract: After skyrocketing over the past decade, commodity prices have remained stable or eased somewhat since mid-2011—and most projections suggest they are not likely to resume the upward trend observed in the last decade. This paper analyzes what this turn in the commodity price cycle may imply for output growth in Latin America and the Caribbean. The analysis suggests that growth in the years ahead for the average commodity exporter in the region could be significantly lower than during the commodity boom, even if commodity prices were to remain stable at their current still-high levels. Slower-than-expected growth in China represents a key downside risk. The results caution against trying to offset the current economic slowdown with demand-side stimulus and underscore the need for ambitious structural reforms to secure strong growth over the medium term.

Keywords: WP; commodity; commodity price; commodity exporter; output; Global VAR (GVAR); commodity prices; output growth; Latin America; food commodity; price scenario; commodity export price index; commodity supply; commodity outlook; commodity-price VARX; commodity price projection; commodity mix; commodity spot prices; commodity exporters of LAC; price outlook; Production growth; Commodity price indexes; Commodity price fluctuations; Global; Caribbean (search for similar items in EconPapers)
Pages: 43
Date: 2014-08-14
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Citations: View citations in EconPapers (21)

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Handle: RePEc:imf:imfwpa:2014/154