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Developing world economies hit hard by coronavirus
By Andrew Walker, BBC, April 23, 2020
https://www.bbc.com/news/business-52352395
The world is experiencing a sharp deterioration in economic performance, due to the continuing coronavirus pandemic.
Developing countries are certain to be hit hard by what the International Monetary Fund, and others, warn will be the worst downturn since the Great Depression of the 1930s.
Almost every country on the planet is being affected. The IMF expects 170 nations – rich and poor – to experience a decline in economic activity per person this year. That means falling average living standards.
Developing economies are being hit in distinctive ways by the pandemic:
Commodity prices
Many are exporters of commodities used by industry. The shutdown of many factories around the world means there is less demand for those commodities, so their prices have fallen, sharply in some cases.
Oil is the starkest example. The loss of demand has been especially severe, as the crisis has led to a massive reduction in demand for transport fuels, more than 90% of which are made from crude oil.
The situation was exacerbated for a period by what was in effect a price war between the two biggest exporters, Russia and Saudi Arabia. There has been an extraordinary situation where some oil prices have been below zero.
It is not a general feature of the oil market, but it does highlight the huge imbalance between supply and demand.
Other commodities have also seen sharp price falls, although not generally on the scale of oil. Copper, for example, is now about 18% cheaper than it was in mid-January, and zinc’s price is more than 20% lower.
These price falls are hitting businesses and government revenues in countries that export these commodities.
Agricultural commodities have generally have been less affected. People still need to eat after all.
The World Bank has described world food markets as “amply supplied following recent bumper harvests, especially in wheat and maize”. Its report does however warn there is a risk that if concerns about food security do spread, hoarding could result.
Read more: https://www.bbc.com/news/business-52352395.
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Thanks to Cindy.