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AfrAsia Bank Limited and its Group Entities
Annual Report 2015
page 129
Capital flows in emerging and developing economies
Source: “World Economic Outlook: Adjusting to lower commodity prices,” IMF, Oct. 2015
Impact of dwindling commodity prices
As to the outlook in low-income developing economies, many of which are located in Africa, lower commodity prices, which have
declined sharply since 2011, pose significant risks after many years of strong growth. The risks are also real in emerging market
and developing economies which are net exporters of commodities. Commodity prices had experienced a sharp rise in the period
2000–2010 on account of sustained robust growth in emerging market economies, and have been a major driver of growth in
several of these countries. China alone absorbed in 2014 half the world’s aluminium, nickel and steel, and about a third of its cotton
and rice. It is now widely believed that China’s appetite for commodities could well have peaked in 2015. This implies bad news for
commodity-exporting countries where already the deterioration in their 2015 primary balance, on account of sharp price declines,
could represent as high as 5% of GDP on average, thus representing a huge reversal of the revenue windfall accrued during the boom
years 2000-2010.
15
12
9
6
3
0
-3
-6
2007
2008
2009
2010
2011
2012
2013
2014
2015
Emerging Europe
Emerging Asia excluding China
Latin America
China
Saudi Arabia
Total
CAPITAL OUTFLOWS EXCLUDING CHANGE IN RESERVES (PERCENT OF GDP)