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TRADE IN TIMES OF COVID-19 PANDEMIC:
EFFECTS OF GLOBAL PRIMARY COMMODITY MARKET
DISRUPTION ON GROWTH AND POVERTY IN WESTER...
AKADEMIYA2063 COVID-19 Workstreams | www.akademiya2063.org
Mapping
Vulnerability
Hot Spots
Staple Food
Price Tracking
Food...
OUTLINE
I. INTRODUCTION
II. METHODOLOGY
III. SCENARIOS
IV. FINDINGS
V. CONCLUSION
I. INTRODUCTION
Why is the analysis of the effects of global primary
commodity market disruption important ?
 The COVD-19 pandemic affect...
The COVID-19 pandemic has driven most primary commodity prices down in 2020
-50
-40
-30
-20
-10
0
10
20
Coal,Australia
Cru...
High Contribution of Primary Commodities in Exports of West African Countries
Primary commodities, share of total IMPORTSP...
Objective
Assess the effects of changing international commodity
prices and global market disruptions on economic growth
a...
II. METHODOLOGY
Data and Analytical Framework
• Simulation models (Akademiya2063 / ReSAKSS)
 Single-Country CGE Models
 Micro-Simulation...
III. SCENARIOS
Scenarios
 Changes in the international price of primary
commodities (Price Shocks)
 Disruption of global trade conditio...
Scenarios (Cont’d)
 2019 price estimates
 2020 price forecasts
Baseline (or BaU) scenario
Price forecasts for the year 2...
Export price scenario is based on the composition of the basket of primary
commodities exported by each country
Changes in...
Share of Top Primary Commodities in Cote
d’Ivoire’s Total Imports, 2019
Changes in predicted Prices for Top Primary
Commod...
The COVID-19 pandemic has a mixed effect on the prices
of primary commodities exported by Western Africa
16
Nigeria -36.6
...
Export price index for each country is based on the structure of its export basket
The COVID-19 pandemic has lowered the prices of
primary products imported by Western Africa
18
Liberia -28.8
Nigeria -25.9...
Country-specific international price changes considering the contribution of primary
products in total exports and total i...
IV. FINDINGS
Real Exchange Rate Depreciation
Change in Real
Exchange Rates,
COVID vs. BaU,
Price Shocks
Change in Real
Exchange Rates,
...
Positive growth effects of primary commodity price shocks in a majority of countries
Percentage point change in GDP growth...
Understanding the growth effects of primary commodity price shocks
Share of primary commodities in total imports
Coted'Ivo...
Import-to-Consumption Ratio
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Intermediaite
Consumption
Final Consumption
Cote d...
Percentage point change in GDP growth, COVID vs. BaU, Price and Trade Shocks
-3 -2 -1 0 1 2 3
NGA
CIV
NER
GHA
SLE
BEN
TGO
...
Change in Poverty
Headcount Ratio,
COVID vs. Baseline,
Price Shock (pp)
Change in Poverty
Headcount Ratio,
COVID vs. Basel...
Increased rural poverty
relative to urban poverty
Change in urban
and rural poverty,
COVID vs. Baseline,
Price Shock (pp)
...
V. CONCLUSION
Key findings
• Negative effects on economic growth in Western African
countries (except BFA, MLI, GMB).
• Negative effects...
Policy Options (Short run)
Protect rural and urban populations
• Scale social protection schemes
Support the rural economy...
Policy Options (medium-long run)
Export diversification
 Increase the contribution of agricultural and
food commodities i...
Agricultural commodities are recovering faster from the pandemic than non-
agricultural commodities in recent price trend
...
Export price index for each country is based on the structure of its export basket
THANK YOU
Alhassane CAMARA (AGRODEP)
Mariam A. DIALLO (A2063)
Ismael FOFANA (A2063)
Yaya KI (AGRODEP)
Leysa M. SALL (A2063...
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Trade in Times of COVID-19 pandemic: Effects of global primary Commodity Market Disruption on Growth and Poverty in Western Africa

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A presentation by Ismael Fofana, Director of Capacity and Deployment at AKADEMIYA2063

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Trade in Times of COVID-19 pandemic: Effects of global primary Commodity Market Disruption on Growth and Poverty in Western Africa

  1. 1. TRADE IN TIMES OF COVID-19 PANDEMIC: EFFECTS OF GLOBAL PRIMARY COMMODITY MARKET DISRUPTION ON GROWTH AND POVERTY IN WESTERN AFRICA Ismael FOFANA AKADEMIYA2063 Director for Capacity and Deployment AKADEMIYA2063 Webinar – December 10, 2020
  2. 2. AKADEMIYA2063 COVID-19 Workstreams | www.akademiya2063.org Mapping Vulnerability Hot Spots Staple Food Price Tracking Food Production Systems Disruption Macro Effects of Trade Disruption 2
  3. 3. OUTLINE I. INTRODUCTION II. METHODOLOGY III. SCENARIOS IV. FINDINGS V. CONCLUSION
  4. 4. I. INTRODUCTION
  5. 5. Why is the analysis of the effects of global primary commodity market disruption important ?  The COVD-19 pandemic affects African economies through several channels including, World market disruptions and variations in international prices of primary products.  High contribution of primary products in total exports of Western African countries. 5
  6. 6. The COVID-19 pandemic has driven most primary commodity prices down in 2020 -50 -40 -30 -20 -10 0 10 20 Coal,Australia Crudeoil,avg Naturalgas,Europe Naturalgas,US NaturalgasLNG,Japan Cocoa Coffee,Arabica Coffee,Robusta Tea,auctions(3),average Coconutoil Groundnutoil Palmoil Soybeanmeal Soybeanoil Soybeans Barley Maize Rice,Thailand,5% Wheat,US,HRW Bananas,US Meat,beef Meat,chicken Oranges Shrimp,Mexico Sugar,World Logs,Cameroon Logs,Malaysia Sawnwood,Malaysia CottonAIndex Rubber,Malaysian Tobacco DAP Phosphaterock Potassiumchloride TSP Urea,E.Europe,bulk Aluminum Copper Ironore Lead Nickel Tin Zinc Gold Silver Platinum Changes in predicted prices in 2020 for primary commodities prices between April 2020 and October 2019 forecast
  7. 7. High Contribution of Primary Commodities in Exports of West African Countries Primary commodities, share of total IMPORTSPrimary commodities, share of total EXPORTS 0 10 20 30 40 50 60 70 80 90 100 Guinea-Bissau Nigeria Ghana Sierra Leone Mauritania Burkina Faso Niger Côte d’Ivoire Benin Guinea Cabo Verde Mali Senegal Gambia Liberia Togo 0 10 20 30 40 50 60 70 80 90 100 Gambia Benin Senegal Côte d’Ivoire Burkina Faso Mali Guinea-Bissau Nigeria Guinea Togo Cabo Verde Sierra Leone Mauritania Ghana Niger Liberia
  8. 8. Objective Assess the effects of changing international commodity prices and global market disruptions on economic growth and poverty in Western Africa Case studies from the 16 West African countries Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo. 8
  9. 9. II. METHODOLOGY
  10. 10. Data and Analytical Framework • Simulation models (Akademiya2063 / ReSAKSS)  Single-Country CGE Models  Micro-Simulation Models • Primary commodity price predictions (World Bank)  Commodity Markets Outlook: October 2019 and April 2020 • Statistics on international trade (United Nations)  Import and export data (2019/2018)
  11. 11. III. SCENARIOS
  12. 12. Scenarios  Changes in the international price of primary commodities (Price Shocks)  Disruption of global trade conditions and international market access (Trade Shocks)  Sensitivity tests on trade elasticities, from “no disruption” to “severe disruption”
  13. 13. Scenarios (Cont’d)  2019 price estimates  2020 price forecasts Baseline (or BaU) scenario Price forecasts for the year 2020 in October 2019 COVID scenario Price forecasts for the year 2020 in April 2020 Changes in the international price of primary commodities
  14. 14. Export price scenario is based on the composition of the basket of primary commodities exported by each country Changes in predicted Prices for Top Primary Commodities Exported by Cote d’Ivoire Share of Top Primary Commodities in Cote d’Ivoire’s Total Exports, 2019
  15. 15. Share of Top Primary Commodities in Cote d’Ivoire’s Total Imports, 2019 Changes in predicted Prices for Top Primary Commodities Imported by Cote d’Ivoire Import price scenario is based on the composition of the basket of primary commodities imported by each country
  16. 16. The COVID-19 pandemic has a mixed effect on the prices of primary commodities exported by Western Africa 16 Nigeria -36.6 Ghana -9.9 Senegal -9.0 Niger -8.9 Côte d’Ivoire -8.8 Sierra Leone -5.3 Togo -4.6 Benin -3.6 Liberia -0.9 Guinea 0.3 Gambia 2.6 Mauritania 2.6 Cabo Verde 3.6 Burkina Faso 4.8 Mali 6.2 Guinea-Bissau 7.9 Changes in Export Price Indices Between October 2019 and April 2020 Forecasts, Western Africa (Percentage Point)
  17. 17. Export price index for each country is based on the structure of its export basket
  18. 18. The COVID-19 pandemic has lowered the prices of primary products imported by Western Africa 18 Liberia -28.8 Nigeria -25.9 Gambia -23.3 Burkina Faso -22.0 Mauritania -21.9 Mali -20.4 Senegal -18.9 Côte d’Ivoire -17.0 Guinea-Bissau -14.5 Cabo Verde -14.3 Togo -13.3 Guinea -12.0 Benin -6.2 Ghana -5.4 Sierra Leone -3.2 Niger -2.5 Change in Import Price Indices Between October 2019 and April 2020 Forecasts, Western Africa (Percentage Point)
  19. 19. Country-specific international price changes considering the contribution of primary products in total exports and total imports Percentage point change in export and import price indices, COVID vs. baseline scenarios 19 -40 -30 -20 -10 0 10 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB CBV MLI SEN MRT BFA GNB Export Price Index Import Pric Index A CB
  20. 20. IV. FINDINGS
  21. 21. Real Exchange Rate Depreciation Change in Real Exchange Rates, COVID vs. BaU, Price Shocks Change in Real Exchange Rates, COVID vs. BaU, Price & Trade Shocks -10 -5 0 5 10 15 20 25 30 35 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB CBV MLI SEN MRT BFA GNB AAAAABBBCCCCCCCC -10 -5 0 5 10 15 20 25 30 35 40 45 50 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB CBV MLI SEN MRT BFA GNB AAAAABBBCCCCCCCC
  22. 22. Positive growth effects of primary commodity price shocks in a majority of countries Percentage point change in GDP growth, COVID vs. BaU, Price Shocks -2 -1 0 1 2 3 4 5 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB CBV MLI SEN MRT BFA GNB AAAAABBBCCCCCCCC
  23. 23. Understanding the growth effects of primary commodity price shocks Share of primary commodities in total imports Coted'Ivoire Coted'Ivoire Ghana Ghana Nigeria Nigeria 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Intermediaite Consumption Final Consumption
  24. 24. Import-to-Consumption Ratio 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Intermediaite Consumption Final Consumption Cote d'Ivoire Primary Others 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Intermediaite Consumption Final Consumption Ghana Primary Others 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Intermediaite Consumption Final Consumption Nigeria Primary Others Understanding the growth effects of primary commodity price shocks (cont’d)
  25. 25. Percentage point change in GDP growth, COVID vs. BaU, Price and Trade Shocks -3 -2 -1 0 1 2 3 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB CBV MLI SEN MRT BFA GNB AAAAABBBCCCCCCCC Negative growth effects of primary commodity price and trade shocks in a majority of countries
  26. 26. Change in Poverty Headcount Ratio, COVID vs. Baseline, Price Shock (pp) Change in Poverty Headcount Ratio, COVID vs. Baseline, Price and Trade Shocks (pp) Increased Poverty Effects -7 -6 -5 -4 -3 -2 -1 0 1 2 3 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB MLI SEN BFA GNB AAAAABBBCCCCCC -3 -2 -1 0 1 2 3 4 5 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB MLI SEN BFA GNB AAAAABBBCCCCCC
  27. 27. Increased rural poverty relative to urban poverty Change in urban and rural poverty, COVID vs. Baseline, Price Shock (pp) Changes in urban and rural headcount poverty rates, COVID vs. Baseline, Price and Trade Shock (pp) -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB MLI SEN BFA GNB AAAAABBBCCCCCC Rural Urban -4 -3 -2 -1 0 1 2 3 4 5 NGA CIV NER GHA SLE BEN TGO LIB GIN GMB MLI SEN BFA GNB AAAAABBBCCCCCC Rural Urban
  28. 28. V. CONCLUSION
  29. 29. Key findings • Negative effects on economic growth in Western African countries (except BFA, MLI, GMB). • Negative effects on poverty in Western African countries (except BFA, MLI, GMB, SRL). • Increase in rural poverty relative to urban poverty in West Africa (7/11 countries).
  30. 30. Policy Options (Short run) Protect rural and urban populations • Scale social protection schemes Support the rural economy • Increase public agricultural investments • Accelerate the implementation of agricultural policies
  31. 31. Policy Options (medium-long run) Export diversification  Increase the contribution of agricultural and food commodities in the export basket.  Increase the number of agricultural and food commodities in the export basket.
  32. 32. Agricultural commodities are recovering faster from the pandemic than non- agricultural commodities in recent price trend Changes in predicted prices in 2020 for primary commodities prices between Oct 2020 and Oct 2019 forecast -50 -40 -30 -20 -10 0 10 20 Coal,Australia Crudeoil,avg Naturalgas,Europe Naturalgas,US NaturalgasLNG,Japan Cocoa Coffee,Arabica Coffee,Robusta Tea,auctions(3),average Coconutoil Groundnutoil Palmoil Soybeanmeal Soybeanoil Soybeans Barley Maize Rice,Thailand,5% Wheat,US,HRW Bananas,US Meat,beef Meat,chicken Oranges Shrimp,Mexico Sugar,World Logs,Cameroon Logs,Malaysia Sawnwood,Malaysia CottonAIndex Rubber,Malaysian Tobacco DAP Phosphaterock Potassiumchloride TSP Urea,E.Europe,bulk Aluminum Copper Ironore Lead Nickel Tin Zinc Gold Silver Platinum
  33. 33. Export price index for each country is based on the structure of its export basket
  34. 34. THANK YOU Alhassane CAMARA (AGRODEP) Mariam A. DIALLO (A2063) Ismael FOFANA (A2063) Yaya KI (AGRODEP) Leysa M. SALL (A2063) Boureima SAVADOGO (AGRODEP)

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