HIRD-WORLD EXPORT SLUMP
Trouble with commodities
The world's least-developed countries (LDCs) house most of the people
who are living below the poverty line - roughly 25% of the global
population.
But their share of world production and trade is declining. In 1996 LDCs
(which don't include SA) contributed only 0,9% to world output and
attracted 0,5% of foreign direct investment. Their 1995 share of exports
and imports was about 0,5%.
Things can only get worse. Commodity prices are expected to fall, partly
as a result of lower demand since the Asian crisis. Other factors, according
to the United Nations' Least Developed Countries 1998 Report, include
increased supply capacity (as in the case of nonferrous metals); the
absence of speculative buying of commodities; and a strong US dollar.
The exception will be commodities such as tea and coffee that have been
affected by bad weather. That should be positive for Uganda, which
derives about 83% of its export earnings from coffee, Rwanda (70%),
Ethiopia (64%) and Burundi (57%.)
Worst-affected will be the countries most reliant on other commodity
exports:
Angola derives 94% of its export earnings from petroleum;
Zambia: 58% from copper;
Liberia and Democratic Republic of Congo: 55% and 51% from
diamonds;
Malawi: 66% from tobacco;
Sao Tome, Principe: 63% from cocoa;
Solomon Islands and Cambodia: 70% from timber; and
Mali: 17% from gold.
Though not classified as an LCD, SA's commodity dependence is
relatively high. By August, of a total R94bn exports, it had sold R13bn in
minerals, R21bn in precious stones and metals and R15bn in base metals.
Admittedly not all were sold in their raw state, but SA's commodity
dependence is still too high.
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