Name:Jibril KadieCommittee: Economic And Financial Committee Topic: The Impact of Sharp Decreasein Commodity PricesCountry: Norway School:United State International University-Africa The International community understands the challenges and thefinancial consequences of thesharp decline in commodity prices and knows that commodity pricesplay an important role inenhancing economic development in most of the developing countries.
Examining and analyzingthe interactions between commodity prices and the business cycle ofcommodity exporters isimportant for all countries who are part of the or have stakes inthe international trade. This is because it will prompt questions such as: Whatdrives the business cycle in commodity economies and how should policymakersrespond to the crises of commodity prices declination? Due to the recentvolatility in commodity prices, the dramatic fall in oil prices, this has sparkeda lot of concerns in the international community. According to (IMF,2015 AFiscal Framework for Uncertain Times), 17% of the world GDP stems fromcountries with more than 20% of exports from non-renewable commodities.
The government of Norway knows and understands the significance ofthe business cycle andcommodity prices. We took the burden of enhancing, controlling andwell- managing theeconomy of the Norwegian people, where indication in both materialand non-material welfare is at high degrees. The intelligent way of utilizing wealthfrom all resources like petroleum resources and the effective use of monetarypolicy within the flexible inflation has protected the Norwegian economy andsupported its recovery.Norway’s economy has maintained its commodity prices due to itscommitment to implement growth-enhancing policies, such as developing a highlydependent system on trade in commodities, with petroleum accounting for 20-25%of GDP and about 50% of total exports,ensuring price and financial stability. We also avoidpro-cyclicality in fiscal policy, ensuring efficient tax and public spending.Again, Norway have been successful in its economic stabilization policy andbecause of this, it has gained significant international interest. This is inparticular with the management and spending of petroleum revenues. Furthermore, the Norwegian salmon farming industry has seen aregular boom both in productivity and value since its beginnings in the 1970’s.
The increase in productivity has made possible the price of salmon to follow along run declining trend. regardless of a regular increase within the controlof production output, industry profits are still sensitive to shocks to stocksthrough disease, escape of fish, algae influx or temperature changes. The Norwegian government developed policies such as fiscal policyand the government pension fund for mitigating the effects of business cyclesand commodity downturn might have on an economy’s systems and stipulating the Norwegianeconomy both in the short and long run