Moody's: Oil exporters suffer biggest economic shortfall after commodity price declines.
Summary: The particularly large fall in GDP amongst oil exporters is accounted for
-- Economic developments for commodity exporters
after a fall in prices vary significantly depending on the type of
commodity, with oil exporters suffering the biggest shortfall in
activity, according to research by Moody's Investors Service.
Slowing demand from some regions, a weaker global growth outlook and
strong supply have dragged commodity prices down in recent months. In
this study, Moody's examined the path of commodity exporters' GDP in the
aftermath of commodity price falls. The analysis centres on four
commodities -- oil, copper, iron ore and cotton.
Moody's report entitled "Economic activity in the aftermath of commodity
price falls" is available through the links at the end of this press
release. The report is the part of a series of linked research on the
pattern and implications of declines in asset prices.
Commodity price movements can have important credit implications for
commodity exporters via lower export and fiscal revenues. Therefore large
falls in commodity prices have potential negative implications for
sovereigns' and other issuers' creditworthiness.
The results show that oil exporters experience the biggest shortfall in
economic activity."For oil exporters, GDP falls on average by around 7%
below the paths seen before the price falls," said Ruosha Li, analyst in
Moody's Macro Financial Analysis team. There were 4% and 2.5% shortfalls
for copper and iron ore exporters, respectively. However, for cotton
exporters, the GDP shortfall was small.
The particularly large fall in GDP amongst oil exporters is accounted for
by typically higher reliance on the commodity for these economies.
"Taking into account the different levels of exposure to commodities and
differences in the typical price fall, the average GDP shortfall is
smaller for oil than for copper and iron ore," Ms Li added. This likely
reflects typically large fiscal buffers for oil exporters that allow
policymakers to implement measures dampening the economic impact of the
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|Publication:||EMBIN (Emerging Markets Business Information News)|
|Date:||Feb 17, 2015|
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