Tanzania: Global Commodity Prices Decline

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Source: Tanzania Daily News (Dar es Salaam)

 THE prices of selected commodities in the world market decreased in the year ended February with the exception of the prices of sisal, tea at the Mombasa auction and gold.

The Central Bank latest report shows that on annual basis, all commodity prices kept the downward pace with the exception of gold and Arabica coffee.

During the period under review, the prices of white petroleum products declined to 514.6 US dollars per tonne compared to 570.5 US dollars per tonne in the preceding month.

The same pattern was observed in the crude oil prices, which declined to the lowest levels since October 2017 to 54.51 per barrel.

This comes as the spread of coronavirus outside of China resulted into weak global demand and output slowdown.

The economic impact of these measures has already led some economists to predict a crisis to follow that could rival the 2008 recession or worse.

Commodity markets are feeling the squeeze, as producers anticipate an economic downturn that could last for months or longer.

The weak performance of stock markets amid fear of coronavirus outbreak pushed the global price of gold to 1,597.1 US dollars per troy ounce in the year ended February from USD 1,560.7 per troy ounce in the preceding month.

“The increase in global price for gold was due to weak performance of stock markets amid coronavirus fears which in turn resulted into investors rushing to gold as a safe haven asset,” the Bank of Tanzania (BoT) said in its latest report.

In Tanzania, gold that accounted for 54.1 percent of non-traditional exports and increased by 33.5 percent to 2,252.9 million US dollars in the reference period from 1,688.2 million US dollars resulting from increase in volume and unit price.

The increase in volume of exported gold is partly associated with continued government initiatives to develop domestic markets for minerals.

The falling prices of both crude oil and white products were largely attributed by the decline in global oil demand. The decline in Robusta coffee, cloves and cotton prices is partly explained by increase in global supply amidst low global demand.

Across the world, countries have shut down that severe restrictions on movement and commercial activity inside their borders will slow the spread of the disease.