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

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  • Bertrand Gruss

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.

Suggested Citation

  • Bertrand Gruss, 2014. "After the Boom–Commodity Prices and Economic Growth in Latin America and the Caribbean," IMF Working Papers 14/154, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:14/154
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    1. repec:bla:worlde:v:41:y:2018:i:12:p:3379-3415 is not listed on IDEAS
    2. repec:rbp:esteco:ree-32-02 is not listed on IDEAS
    3. Ludovic Gauvin & Cyril C. Rebillard, 2018. "Towards recoupling? Assessing the global impact of a Chinese hard landing through trade and commodity price channels," The World Economy, Wiley Blackwell, vol. 41(12), pages 3379-3415, December.
    4. Flores, Jairo, 2015. "Transmisión de Choques de Política Monetaria de Estados Unidos sobre América Latina: Un Enfoque GVAR," Working Papers 2015-018, Banco Central de Reserva del Perú.
    5. Druck, Pablo & Magud, Nicolas E. & Mariscal, Rodrigo, 2018. "Collateral damage: Dollar strength and emerging markets’ growth," The North American Journal of Economics and Finance, Elsevier, vol. 43(C), pages 97-117.
    6. Gondo, Rocío & Pérez, Fernando, 2018. "The Transmission of Exogenous Commodity and Oil Prices shocks to Latin America - A Panel VAR approach," Working Papers 2018-012, Banco Central de Reserva del Perú.
    7. Samaniego, Pablo & Vallejo, María Cristina & Martínez-Alier, Joan, 2017. "Commercial and biophysical deficits in South America, 1990–2013," Ecological Economics, Elsevier, vol. 133(C), pages 62-73.
    8. International Monetary Fund, 2016. "Uruguay; Selected Issues," IMF Staff Country Reports 16/63, International Monetary Fund.
    9. repec:eee:wdevel:v:113:y:2019:i:c:p:294-308 is not listed on IDEAS
    10. Torsten Schmidt & Roland Döhrn & Philipp Jäger & Philipp an de Meulen & Daniela Grozea-Helmenstein & Svetlana Rujin & Lina Zwick, 2014. "Die wirtschaftliche Entwicklung im Ausland: Moderate Expansion der Weltwirtschaft," RWI Konjunkturbericht, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 34, 09.
    11. Heiko Sorg & Christoph Weissbart & Philipp Wertz, 2015. "Kurz zum Klima: Rohstoffmärkte im »Superzyklus«," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(18), pages 73-76, September.
    12. Carlos Andrés BALLESTEROS RUIZ & Javier Andrés ROJAS AGUILERA, 2015. "International shocks and the Colombian economy: A Global VAR Approach," Archivos de Economía 013012, Departamento Nacional de Planeación.
    13. repec:eee:respol:v:47:y:2018:i:10:p:1918-1932 is not listed on IDEAS
    14. Schmidt, Torsten & Döhrn, Roland & Jäger, Philipp & an de Meulen, Philipp & Grozea-Helmenstein, Daniela & Rujin, Svetlana & Zwick, Lina, 2014. "Die wirtschaftliche Entwicklung im Ausland: Moderate Expansion der Weltwirtschaft," RWI Konjunkturberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, vol. 65(3), pages 5-38.
    15. Jose De Gregorio, 2015. "From Rapid Recovery to Slowdown: Why Recent Economic Growth in Latin America Has Been Slow," Policy Briefs PB15-6, Peterson Institute for International Economics.
    16. Eichenauer, Vera Z. & Fuchs, Andreas & Brueckner, Lutz, 2018. "The Effects of Trade, Aid, and Investment on China's Image in Developing Countries," Working Papers 0646, University of Heidelberg, Department of Economics.

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