Life after the commodity boom
Instead of the crises of the past, mediocre growth is the big risk—unless productivity rises
ONE morning last month Louis Dreyfus, a big commodity-trading house, formally opened a new $10m storage depot in the Peruvian port of Callao. Two of its six bunkers were piled high with 55,000 tonnes of fine brown dust covered by white tarpaulins—copper and zinc concentrate, awaiting blending and shipment. The warehouse is “a bet that Peruvian mining will continue to be competitive,” says Gonzalo Ramírez, a Dreyfus manager. That looks like a sound wager. Blessed with high-grade ores and cheap energy, Peru’s output of copper—already the world’s third-largest—will more than double in the next three years (see article), thanks to the opening of several low-cost mines.
But rather than marking a new dawn, this burst of investment comes at the twilight of the great commodity boom occasioned by the industrialisation of China and India. By providing an unprecedented boost to the region’s terms of trade (the ratio of the price of its exports to that of its imports), this handed many Latin American countries a bounteous decade (see chart 1).
This article appeared in the The Americas section of the print edition under the headline "Life after the commodity boom"
More from The Americas
Why Ecuador risked global condemnation to storm Mexico’s embassy
Jorge Glas, who had claimed asylum from Mexico, is accused of abetting drug networks
The world’s insatiable appetite for Canada’s maple syrup
Production is booming, but climate change is making output more erratic
Elon Musk is feuding with Brazil’s powerful Supreme Court
The court has become the de facto regulator of social media in the country