The sharp realignment of global commodity prices has been a major setback for commodity-exporting low-income developing countries (LIDCs), while generally benefitting others. With many commodity exporters, especially in Africa, still struggling to adapt to sharply lower export and budgetary revenues, macroeconomic conditions have become increasingly divergent across the LIDC universe. Commodity exporters have experienced a marked slowdown of economic activity, with some suffering downright recessions, while diversified LIDCs that are less dependent on commodities have seen, with a few exceptions, stronger overall growth.
On February 16, the Brookings Africa Growth Initiative program hosted a discussion on a new IMF staff paper, Macroeconomic Developments and Prospects in Low-Income Developing Countries, which looks at the divergent growth prospects across the LIDC universe, their unique policy challenges and the priorities to overcome them. The analysis of risks and vulnerabilities focuses on financial sector stresses as well as medium-term fiscal risks. With 2016 the first year of the march towards the 2030 development goals, the paper also looks at how infrastructure investment can be accelerated in LIDCs, given that weaknesses in public infrastructure (such as energy, transportation systems) in LIDCs are widely seen as key constraint on medium-term growth potential.
IMF Deputy Managing Director Tao Zhang presented the key themes of the paper after which there was a panel discussion moderated by AGI Acting Director and Senior Fellow John McArthur.