Countries dependent on commodities hit 20-year high

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Developing countries almost exclusively affected

Commodity dependence affects developing countries almost exclusively, according to the report.

It affects 85% of least developed countries, 81% of landlocked developing countries and 57% of small island developing states.

With 89% of countries in Sub-Saharan Africa being commodity-dependent, it is the hardest-hit region.

It is followed by the Middle East and North Africa, where 65% of countries depend on commodities.

Half of the countries in Latin America and the Caribbean, and half of the countries in East Asia and the Pacific are also commodity dependent.

Persistent problem

Commodity dependency is also persistent, according to the report.

The dominant groups of exported products changed in only 25% of countries between 2013 and 2017, partly due to changes in commodity prices.

The number of countries dependent on the export of agricultural products declined from 50 to 37 between the 1998-2002 and 2013-2017 periods.

The number of mineral-dependent countries steadily rose, from 14 to 33, while the number of energy-dependent countries increased from 28 to 32.

Relative price fluctuations among the different commodity groups contributed to changes in the dominant product groups exported, as the prices of energy and minerals increased much more than those of agricultural and manufactured goods.

Vulnerability to price shocks and volatility

Commodity-dependent developing countries are vulnerable to negative commodity price shocks and price volatility.

The average commodity price levels between 2013 and 2017 were substantially below their peak of between 2008 and 2012, the report reveals.

This contributed to an economic slowdown in 64 commodity-dependent countries, with several of them going into recession.

As growth decelerated, the fiscal situation in many of these countries deteriorated, resulting in the accumulation of public debt, often as an increase in external debt.

The external debt of 17 commodity-dependent developing countries increased by more than 25 per cent of GDP between 2008 and 2017, according to the report.

Efforts at diversification

The report notes that some countries have succeeded in diversifying their production and exports over the past two decades.

For instance, some energy-export dependent countries such as Oman, Saudi Arabia and Trinidad and Tobago increased the share of their non-commodity exports by adding value in their downstream sectors. Other energy or mineral-export-dependent countries like Rwanda and Cameroon managed to expand their agricultural exports.

The 2019 report, the fourth edition in the series launched in 2012, contains 189 statistical country profiles of developed countries and economies in transition.