May 26, 2016 / 1:07 PM / a year ago

Fitch: Emerging Markets' Commodity Gains Quickly Unwound

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Global Perspectives: Emerging Markets' Commodity Gains Quickly Unwound here LONDON, May 26 (Fitch) A number of key economic and financial ratios in commodity-based emerging markets (CEMs) have already returned to pre-boom levels, two years after the sudden end of the commodity boom, says Fitch Ratings in its latest Global Perspectives commentary. The speed of the change, and size of the declines in fiscal and export receipts, suggest an extended period of adjustment ahead. Emerging-market commodity exporters' fiscal revenue is likely to be USD1.3trn lower in 2016 than in 2013, and current account receipts USD1.2trn lower. Taking account of economic growth, fiscal performance and external finances since 2003, Bolivia, Peru, Azerbaijan and Cote d'Ivoire benefitted most from the boom among Fitch-rated CEMs, while Bahrain, Gabon, Venezuela and Suriname benefitted the least. As commodity prices have come down, the consequences of policy decisions during the upswing - based in part on how decision makers interpreted the cycle - have begun to emerge. Previous spending increases that have not responded to lower revenue represent another factor contributing to recent fiscal deterioration. Median government spending in CEMs has increased by about 5 percentage points of GDP since the mid-2000s, but it has been unchanged since 2012. In contrast, government spending in non-commodity emerging markets (NCEMs) increased by about 3 percentage points of GDP before 2012, and then declined by 2 percentage points of GDP, implying a stronger policy response even though they were not faced with the same dramatic revenue declines. Global Perspectives is a monthly commentary series by James McCormack, Fitch's Global Head of Sovereign Ratings, on key issues affecting the world economy. Read the full commentary by clicking the link above or go to www.fitchratings.com. Contact: James McCormack Global Head of Sovereign and Supranational Group +44 20 3530 1286 Fitch Ratings Limited 30 North Colonnade London E14 5GN Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com; Hannah James, New York, Tel: + 1 646 582 4947, Email: hannah.james@fitchratings.com; Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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