By Gustavo Adler and Sebastián Sosa
(Version in Español)
As a commodity exporting region, Latin America has greatly benefited from the commodity price boom of the past decade. But with talk of a new global recession, what will happen to the region if the boom turns to bust?
The IMF's latest Regional Economic Outlook: Western Hemisphere sheds light on Latin America's reliance on commodities from a historical perspective. Our study also looks at the effect of a sharp decline in commodity prices on emerging market economies and on the policies that could shield countries from that shock.
More dependent but also more diversified
The reliance on commodity exports can be looked at as a share of GDP (commodity dependence) as well asrelative to total exports of goods and services (export diversification).
The first ratio tells us about the potential impact of a commodity price shock on domestic output, while the second tells us about the economy's ability to adjust to a commodity price shock. There are significant differences within the region across these two dimensions: