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Commodity exporters yet to feel effects of lower prices — IMF report

Godwin Emefiele, CBN Governor
Godwin Emefiele, CBN Governor

Economic growth in commodity-exporting countries is likely to slow more amid expectations for further weakness in commodity prices, particularly of energy and metals, the International Monetary Fund (IMF) says in a new study.

“A significant deceleration in growth rates is unavoidable for many (commodity-exporting) economies,” the IMF study said.

The declines in commodity prices could shave off one percentage point annually from the growth rate of commodity exporters over 2015 to 2017 as compared with 2012 to 2014, the IMF report said.

The drag was expected to be even larger for exporters of energy commodities, at almost two-and-a-half percentage points on average.

The effect of lower commodity prices on growth would require policy makers to be more vigilant, according to the global lender.

The study’s findings suggested policy makers should let exchange rates be more flexible and avoid “excessive” government spending to smooth the effect of commodity price swings on their economies.

The fund also advised authorities to implement structural changes where economic growth was disappointing.

“The structural reform priorities vary across countries, but removing infrastructure bottlenecks, improving the business climate, and enhancing the quality of education are common goals across many,” the IMF said.

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