Page 30 - Abyssinia Busniess Network November 2019

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developing countries. This could add any sharp loss of confidence falling from 149 in October to
to the already diminished levels of trust in their own currency coming 115 in December. The subsequent
in the multilateral system, with further after a rapid increase in external recovery has been partially on
damage to global economic prospects. debt could expose them to much account of higher oil prices
deeper deflationary pressures, as affected by sanctions on Iran and
Currency movements are adding to has already occurred in Argentina partially because of mild buoyancy
the sense of economic anxiety. These and Turkey. in the prices of minerals, ores and
have become much more volatile in metals.
the era of hyperglobalization with the Commodity markets have been
financialization of currency markets. on a rollercoaster ride since the A spluttering North, a general
The Morgan Stanley Emerging Market financial crisis; these are now in slowdown in the South and
Currency Index rose significantly at a softer phase, with prices well rising levels of debt everywhere
the beginning of 2019 but fell sharply below post-crisis highs. While are hanging ominously over the
between mid-April and late May, depressed demand underlies global economy; these, combined
only to climb again thereafter. Three the absence of price buoyancy with increased market volatility, a
factors are behind this volatility: sharp in many commodity markets in fractured multilateral system and
fluctuations in crisishit countries such recent months, medium-term mounting uncertainty, are framing
as Argentina and Turkey; the volatility volatility has been influenced the immediate policy challenge.
of capital flows to emerging markets by the wide fluctuations in oil
resulting from policy uncertainty in prices, by the financialization of The macroeconomic policy stance
the developed countries and weaker commodity markets and by the adopted to date has been lopsided
growth prospects in emerging markets; concentration of market power in and insufficiently coordinated to
and more generalized pressure from a small number of international give a sustained boost to aggregate
the United States Administration to trading companies. demand, with adjustments left
keep the dollar “competitive”. In an to the vagaries of the market
international financial system still The UNCTAD commodity price through a mixture of cost-cutting
heavily dependent on a predictable role index fell from 134 in October and liberalization measures.
for the dollar, turning that role long 2018 to 112 in December that Ephemeral growth spurts and
recognized as an “exorbitant privilege” year, and since then has risen to financial volatility have been the
into a source of economic ordnance reach a level in the neighbourhood predictable results. But there are
could bring more destabilizing of 120. Fuel prices drove the fall deeper challenges ahead that are
consequences. An immediate worry in the index in the last quarter of truly daunting for people and the
for many developing countries is that 2018, with the index of fuel prices planet.

28 Abyssinia Business Nework ህዳር 2012 / November 2019