Commodity price shocks

The steep decline in the prices of commodities (oil, minerals, metals) following the global financial crisis is clearly having an effect on African countries. But the effect is asymmetric between importers and exporters of commodities. For instance, oil importers, who suffered in 2008 from the sharp increase in oil prices (reaching $140 a barrel), will benefit from the decline in oil prices, whereas the reverse is true for oil exporters. Using the latest commodity forecasts available, my colleague Cristina Savescu  has calculated the size of the terms of trade shock (expressed as a percentage of 2006 GDP) for African countries in 2008 and 2009. As the summary table below indicates, the rankings are almost completely reversed: the countries with the most favorable terms of trade shocks in 2008 (“top five”) are among those with the most negative in 2009 (“bottom five”), and vice-versa.