GRAPHIC-Copper collapse a fresh blow for many emerging economies

Thu Jan 15, 2015 12:49pm EST
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By Sujata Rao

LONDON Jan 15 (Reuters) - The collapse in prices for copper will deal a blow to emerging economies from Chile to Congo that are reliant on exports of the metal, with currencies and economic growth likely to bear the brunt.

Copper has tumbled to six-year lows this week, sending shockwaves through global markets that are just coming to terms with oil's 60 percent price slide since June. Worst hit are likely to be Chile and Peru, the world's top and third largest copper producers respectively.

Other major emerging market copper producers, according to the U.S. Geological Survey, are China, Russia, Congo, Zambia and Mexico, this graphic shows:

A fifth of Chile's annual economic output and half its exports come from copper, while Peru relies on the metal for around 20 percent of exports. Chile's peso and Peru's sol have slumped to 6- and 5-1/2 year lows to the dollar respectively . Chilean and Peruvian stocks have also fallen sharply this week.

"This is a huge headwind. The impact (of copper price falls) means slower exports and weaker exchange rates and (in turn) imported inflation, slower growth and weaker consumer spending... the days of 5 percent-plus growth are gone," said Michael Henderson, analyst at risk consultancy Verisk Maplecroft.

Copper also helped fuel brisk 6 and 8 percent-plus growth rates respectively in African copper producers Zambia and Congo, with copper providing around 70 percent of Zambian exports, data from the African Development Bank shows.

The kwacha is down roughly 2 percent this year

But the price falls will also hurt others, especially Kazakhstan, Mexico and Russia, that are already suffering from oil price falls. Kazakhstan for instance is under growing pressure to devalue the tenge currency to keep its exports competitive against neighbouring Russia. (Graphic by Vincent Flasseur; Editing by Ruth Pitchford)