The Role of Major Emerging Markets in Global Commodity Demand

28 Pages Posted: 28 Aug 2018

Date Written: June 26, 2018

Abstract

Rapid growth among the major emerging markets over the past 20 years has boosted global demand for commodities. The seven largest emerging markets accounted for almost all the increase in global consumption of metals, and two-thirds of the increase in energy consumption over this period. As emerging market economies mature and shift towards less commodity-intensive activities, their demand for commodities may plateau. This paper estimates income elasticities of demand for a range of energy, metal and food commodities, and finds evidence of plateauing among several commodities. Looking ahead, as economies mature and GDP growth slows, growth in demand for commodities may also slow. Based on current population and GDP growth forecasts, this paper produces scenarios of potential growth in demand for commodities over the next decade. While global energy consumption growth may remain broadly steady, growth in global demand for metals and food could slow by one-third over the next decade. This would dampen global commodity prices. Despite an expected slowdown in its growth rate, China would likely remain the single largest consumer of many commodities. For the two-thirds of emerging market and developing economies that depend on raw materials for government and export revenues, these prospects reinforce the need for economic diversification and the strengthening of policy frameworks.

Keywords: Energy and Mining, Energy and Environment, Energy Demand, Mining & Extractive Industry (Non-Energy), Primary Metals, Oil Refining & Gas Industry, Food Security

Suggested Citation

Baffes, John and Kabundi, Alain Ntumba and Nagle, Peter Stephen Oliver and Ohnsorge, Franziska, The Role of Major Emerging Markets in Global Commodity Demand (June 26, 2018). World Bank Policy Research Working Paper No. 8495. Available at SSRN: https://ssrn.com/abstract=3238333

John Baffes (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/jbaffes

Alain Ntumba Kabundi

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Peter Stephen Oliver Nagle

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Franziska Ohnsorge

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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