Export Performance with the Food Price and Financial Crisis

The global economy experienced a surge in international cereal prices over 2007, peaking in the second quarter of 2008. The dramatic rise in corn, wheat, and rice prices has been attributed to a host of factors including droughts in grain-producing regions, rising oil prices, which in turn led to an escalation in transport costs and agricultural inputs (e.g. fertilizers), increased biofuels production, falling food stockpiles, and adverse policy interventions (export restrictions, panic buying). The financial crisis, triggered by the collapse of the housing bubble in the United States in 2007, eventually led to a credit crunch and major recession in the main economies. Both the food price crisis and financial crisis have repercussions in global trade and in the economic growth of the developing countries.

We examine the impacts of the food price and financial crises on the export performance of our focus economies. In general, the four countries enjoyed rapid export growth through 2008 consistent with GDP growth in these economies and with rising global trade. The food price crisis led to larger increases in the value of exports in 2008 despite declining volumes as prices of export commodities were driven up. The impacts on the four countries vary as influenced by the market developments in their key exports. Preliminary data for 2009 indicate that the countries experienced slower export growth (Ghana) or even a contraction in exports since 2008 (Morocco, Mozambique, Vietnam) following the financial crisis and recession in developed economies. These have contributed to the decline in economic growth in these economies in 2009.