IMF sees growing need for commodity economies to diversify

22Nov 2017
The Guardian
IMF sees growing need for commodity economies to diversify

THE poor economic outlook for com- modity producing economies intensi es the need for diversi cation, according to Dr Gian Maria Milesi Ferretti, deputy director of the International Monetary Fund (IMF) research department.

Dr Gian Maria Milesi-Ferretti

Milesi-Ferretti was speaking on the IMF’s World Economic Outlook October 2017 report, at a briefing hosted by the UJ College of business and economics on Monday.

The report indicated that emerging market and developing economies de- pendent on commodity exports would face weaker economic prospects than more diversified economies.

Milesi-Ferretti explained that com- modity pricing is one of the main driv-

ers of prospects in these commodity producing countries, which will hope- fully change if more diversified eco- nomic structures are introduced.

He explained that a lot of this de- pends on the “depth of pockets”. “Sau- di Arabia with a giant sovereign wealth fund, can be more aggressive in pursu- ing a strategy of that kind [beneficia- tion].

They have ambitious programmes to diversify the country.”

Diversifying economies is a medium- term challenge and cannot happen overnight, said Milesi-Ferretti.

These processes should also allow for market forces to “pick winners”. “Government is not always in the best position to decide what is tomorrow’s sector,” he said.