A new research by the United Nations Conference on Trade and Development (UNCTAD) has painted a seeming grim economic picture for Nigeria and other commodity-dependent developing countries.
UNCTAD’s findings raise concerns for economies that rely on exports of primary goods, such as energy products, ores and grains.
Some two-thirds of developing countries are commodity dependent according to the UNCTAD data.
For commodity-dependent developing countries, some of the most vulnerable on the planet, the drop is projected to be between $2.9 billion and $7.9 billion, which will constitute a 9.00% loss in terms of annual growth rate.
The research also says global exports of commodities to China could plunge by $15.5 billion to $33.1 billion in 2020 – a drop of up to 46% compared with annual growth projections before the COVID-19 pandemic hit.
Due to the fact that China absorbs about one-fifth of world commodities’ exports, such a drop in its imports will have a dramatic impact on producers of primary goods.
An UNCTAD economist who conducted the study, Marco Fugazza, says “assessing the impact in China says a lot about possible general tendencies. It provides important information that may help policymakers anticipate what may happen globally.”
Adding, he says that UNCTAD awaits similar statistics from other big markets, such as the European Union, to expand the analysis. “There have been few assessments done so far at a relatively disaggregated product level using up-to-date information.”
Dramatic drop for energy, ores and grains
Total exports are being dragged down primarily by the dramatic drop in Chinese demand for energy products, ores and grains.
Imports of liquefied natural gases, for example, could fall by up to 10% in 2020 compared with a projected increase of 10% before the COVID-19 outbreak.
Iron imports are still expected to increase, the study says, but growth could fall by two-thirds, from a pre-coronavirus annual growth projection of 19% to just 6%.
Wheat imports are now projected to decrease by 25%, twice as much as before the crisis.
While exports of most commodities are expected to take a hit, the study projects a positive outcome for several agricultural products compared with expectations before COVID-19.
Chinese imports of soya beans from commodity-dependent developing countries, for example, is now projected to grow by 34% – 10 percentage points more than earlier forecasts.
Similarly, the annual growth rate of imports for copper from these nations is expected to double, from a 5.4% projection pre-pandemic to 11%.
These variations at the product level could lead to very different outcomes at the country level.
“While large exporters of natural gases to China, such as Myanmar, may see their trade perspectives deteriorate because of the coronavirus pandemic”, says Fugazza, adding, “other countries such as Equatorial Guinea may see an exponential increase in, for example, exports of wood.”
The data gives hope that some COVID-19 effects on trade could be positive, at least for some exporters.
“A necessary condition for this to happen”, he says, “is the removal of any pandemic-specific trade interventions, such as export restrictions.”