Global Economic Prospects 2009

Description

The eruption of the worldwide financial crisis has radically recast prospects for the world economy. 'Global Economic Prospects 2009: Commodity Markets at the Crossroads' analyzes the implications of the crisis for low- and middle-income countries, including an in-depth look at long-term prospects for global commodity markets and the policies of both commodity producing and consuming nations.
Developing countries face sharply higher borrowing costs and reduced access to capital. This will cut into their capacity to finance investment spending-ending a five-year stretch of developing-country growth in excess of 6 percent annually. The looming recession presents new risks, coming as it does on the heels of the recent food and fuel crisis.
Commodity markets, meantime, are at a crossroads. Years of fast GDP growth contributed to the rise in commodity prices, while the slowdown provoked by the financial crisis has seen those same prices plummet. However, other factors were also at play, notably a period of low investment in commodity supply capacity during the 1990s due to low prices and reduced demand from the countries of the former Soviet Bloc.
In the longer run, slower population growth is expected to ease the pace at which commodity demand grows, while commodity producers are expected to discover sufficient new supplies and improved production techniques to prevent any acute shortages from developing. In part, this is because prices are projected to be higher than they were in the 1990s, which will induce necessary investment in exploration and production by firms. Higher prices will also promote greater conservation and substitution with more abundant alternatives, while policies to limit carbon emissions and boost agricultural investment and the dissemination of efficient techniques will also contribute.
This year's 'Global Economic Prospects' also looks at government responses to the recent price boom. Producing-country governments have been more prudent than during earlier booms, and because they have saved more of their windfall revenues, they are less likely to be forced to cut into spending now that prices have declined. The spike in food prices tipped more people into poverty, which led governments to expand social assistance programs. Ensuring such programs are better targeted toward the needs of the very poor in the future will help improve the capacity of governments to respond effectively the next time there is a crisis.

Informations

• Publié par: world-bank-publications
• Publié le: 09 décembre 2008
• Nombre de lectures: 18
• EAN13: 9780821377994
• Langue: English
• Poids de l'ouvrage: 3 Mo

Extrait

Global
Economic
Prospects
Commodities at the Crossroads2009Global
Economic
ProspectsGlobal
Economic
Prospects
Commodities at the Crossroads
2009© 2009 The International Bank for Reconstruction and Development / The World Bank
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Washington DC 20433
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Internet: www.worldbank.org
E-mail: [e-mail]
All rights reserved
1 2 3 4 12 11 10 09
This volume is a product of the staff of the International Bank for Reconstruction and
Development / The World Bank. The findings, interpretations, and conclusions expressed in
this volume do not necessarily reflect the views of the Executive Directors of The World Bank
or the governments they represent.
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ISBN: 978-0-8213-7799-4
eISBN: 978-0-8213-7801-4
DOI: 10.1596/978-0-8213-7799-4
ISSN: 1014-8906
Cover photos: Oil platform worker in Urucu, Brazil by Hervé Collart/Corbis (left); Molten steel
being poured in Tangshan, China by Yang Liu/Corbis (top right); Farmers in Kenya by Curt
Carnemark/The World Bank (bottom right)
Cover design: Critical Stages
The cutoff date for the data used in this report was November 20, 2008. Dollars are current
U.S. dollars unless otherwise indicated.Contents
Foreword xi
Acknowledgments xiii
Abbreviations xv
Overview 1
Chapter 1 Prospects for the Global Economy 15
Financial markets 19
Outlook for high-income OECD countries 24
Outlook for the developing countries 27
World Trade 36
Commodity markets 39
Key risks and uncertainties 45
Long-term prospects and poverty forecast 46
Chapter 2 The Commodity Boom: Longer-Term Prospects 51
Characteristics of the current commodity price boom 53
The roots of the boom in commodity prices 57
Long-term demand prospects 64supply 74
Projections 85
Conclusions 89
Chapter 3 Dealing with Changing Commodity Prices 95
Commodity dependence and growth 98
Managing primary commodity booms 102
Poverty impacts of higher commodity prices 113
Dealing with high food and fuel prices 121
The international response to high commodity prices 127
Conclusions 131
Technical Annex: Sensitivity Analysis 132
vCONTENTS
Appendix: Regional Economic Prospects 141
East Asia and the Pacific 141
Europe and Central Asia 147
Latin America and the Caribbean 153
Middle East and North Africa 159
South Asia 166
Sub-Saharan Africa 171
Figures
O.1 The recent commodity boom was the largest and longest of any boom
since 1900 4
O.2 Real commodity prices in local currency units increased by between 75 and
150 percent but have fallen since 4
O.3 Slower growth should ease commodity demand 5
O.4 Technological progress has reduced the quantity of commodities used per unit
of GDP 5
O.5 Oil prices are having a direct impact on food prices 8
O.6 On average, poor countries are dependent on commodities but relatively
resource poor 9
O.7 Primary commodity exporters are exhibiting fewer signs of the behaviors linked to the
“resource curse” 10
O.8 Exchange rates, inflation, and government expenditures in new versus established oil
exporters, 2001–06 10
1.1 GDP growth 18
1.2 Emerging market equities are hit hard as turbulence evolves to crisis 22
1.3 Emerging-market bond spreads widen, especially for corporates 22
1.4 Private debt and equity flows decline by a third in 2008 23
1.5 Change in GDP in the United States, Europe, and Japan 25
1.6 The contribution of U.S. domestic demand to GDP growth 25
1.7 U.S. household wealth falls sharply in the last quarters 26
1.8 GDP to decline across the OECD 26
1.9 East Asian countries show steep falloff in output growth 27
1.10 Output growth in Latin America, South Asia, and Europe and
Central Asia is fading 28
1.11 Investment was the driving force for growth in developing countries 28
1.12 Developing-country GDP growth is expected to fall below 5 percent in 2009 30
1.13 Headline inflation is easing across industrial countries 30
1.14 Inflation in emerging markets surged on higher food and energy prices 30
1.15 Key developments in 2008 for East Asia and the Pacific 33
1.16 Sovereign bond spreads widen across Europe and Central Asia 33
1.17 In Latin America and the Caribbean, current accounts of largest
economies diverge 34
1.18 Oil revenues, recovery from drought underpin growth in the Middle East and North
Africa in 2008 35
1.19 South Asian production slips in the last months 36
1.20 In Sub-Saharan Africa, primary commodity exports increased as prices surged 36
1.21 World trade is expected to decline in 2009 for the first time since 1982 37
viCONTENTS
1.22 Decline in high-income import growth affects developing-country exports 37
1.23 Developing-country exports have been strong, even outside China 37
1.24 Developing-country current account surpluses to wane after 2008 38
1.25 Current account balances for commodity-exporting and -importing developing-country
groups (excluding China) 39
1.26 Almost all currencies have depreciated against the dollar 39
1.27 Commodity prices surged before retreating in the second half of 2008 40
1.28 Crude oil prices correct sharply after unprecedented run-up 40
1.29 Grains prices show sharp declines from recent peaks 43
1.30 Most vulnerable countries will benefit from the decline in grains and oil prices 45
1.31 First-round income impact of lower commodity prices will be positive in more than
half of developing countries 45
1.32 Revised poverty estimates following from new price survey 49
2.1 The recent commodity boom was the largest and longest of any
boom since 1900 55
2.2 The real local currency price of commodities rose much less than the real
dollar price 56
2.3 Oil and metal prices led this boom, with food prices rising only much later 56
2.4 Global growth lasted longer and was stronger during the recent commodity boom than
in earlier ones 57
2.5 Dormant capacity helped keep oil prices low in the 1990s 59
2.6 Real spending by major American multinational oil companies declined by 60 percent
in the 1980s 59
2.7 Global metal demand also fell during the transition 59
2.8 Real food prices were broadly stable in developing countries until mid-2007 61
2.9 Most of the decline in global grain stocks reflects lower stocks in China 63
2.10 Outside of China, only wheat stocks are unusually low 63
2.11 Demand for most commodities has grown less rapidly than GDP but more rapidly
than population 64
2.12 The quantity of most commodities used per unit of GDP was declining
until recently 65
2.13 Metal intensities have declined steadily in high-income countries but have reversed in
China since 1993 69
2.14 Metal intensities in China are much higher than elsewhere 70
2.15 Weaker population growth should slow demand for food 71
2.16 Per capita grain demand tends to stop rising when income reaches
around $5,000 72
2.17 Demand for edible oils grew much faster than population in Asia 72
2.18 Food crop prices have become sensitive to oil prices 73
2.19 Output of virtually all commodities has increased since 1965 74
2.20 Almost all of the additional oil supply since the 1970s has come from
nontraditional sources 75
2.21 Rather than declining, known oil reserves keep rising 75
2.22 Gas reserves are almost as large as oil reserves 76
2.23 Agricultural productivity has been rising rapidly over the past 20 years 80
2.24 For key crops, most of the increase in output was due to increased yield, not increased
area planted 81
2.25 Yield growth has decelerated recently 81
viiCONTENTS
2.26 The stock of unused but potentially arable land is enormous 82
2.27 Developing countries spend less on agricultural R&D than high-income countries 83
3.1 More-diversified developing countries grew more rapidly from 1980 to 2006 98
3.2 Poorer countries are more dependent on nonfuel primary commodities 98
3.3 On average, poo