The organisation Red Sur has just published a useful report on the significance of the fall in commodity prices over the last two years for the various Latin American economies, using data constructed and published by the World Bank. A first finding is that in real terms, commodity prices on average are back at the level of the 1960s, but still somewhat higher than the 1980s.
Comparing countries, it is no surprise that Venezuela, as the major oil producer, is by far the worst hit, if we compare the World Bank’s projections for 2015 with the previous year. The estimated loss of GDP is some 10%. Ecuador and Colombia as significant oil producers also suffer badly, but not as badly as Venezuela. Next come the copper exporters, with Peru doing better than Chile, helped by the relative stability of the price of gold. Peru’s loss is still estimated at between 2 and 3% of GDP. The agricultural exporters suffer less.
As regards the future for copper, the report has an interesting graph showing how the relationship between the price of copper and Chinese industrial production changes from one of ‘no relation’ between 2003-9 to ‘a close relation’ over the last five years (page 7).