Poor countries' commodity reliance is worsening, says UN

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Too many countries rely on exporting too few commodities, the UN trade agency says in a new report. Photo: World Bank/John Hogg

Heavy falls in the price of commodities – raw materials such as oils, metals and foods – have left the world's poorest countries more vulnerable than ever, the UN said Wednesday.

In a study of 135 countries, UN economists found that two out of three developing countries are commodity-dependent, and that half of them are African nations.

And according to the UN Conference on Trade and Development (UNCTAD), almost half of all developing countries have seen their reliance on commodity exports grow, with little to fall back on now that prices are sliding.

Daniel Johnson has more.

In the sometimes murky world of commodities, the UN report gives a clear indication about how exposed poor countries are to plunging prices of everyday goods like copper, wheat and oil.

Developing countries are particularly at risk and two-thirds of them are said to be "commodity- dependent".

That's the term used to describe a country which earns more than 60 per cent of its revenues from commodity exports .

When prices of raw materials are rising, as they did for much of the last decade, these developing countries had nothing to worry about.

But as prices have tumbled across the commodities board, so have their fortunes.

Janvier Nkurunziza is an economist with the UN Conference on Trade and Development (UNCTAD) agency which produced the report:

"Between 2010 and 2013 commodity dependence has actually increased. That is not good, it's not good because when you are too dependent, it means if something happens on the commodity on which we depend, your economy is affected because that's how you get your foreign currency; you get it out of your exports."

The very poorest countries are even more at risk, UNCTAD says, with 85 per cent of them found to be commodity dependent.

Equally worrying, the report shows that too many developing countries rely on too few commodities for the bulk of their income.

To protect themselves from price shocks these countries should try to export more valuable goods made from their own raw materials, the UN recommends.

Daniel Johnson, United Nations

Duration: 1'07"

 

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