The Economies of the Andean Arc in the Face of Low Commodity Prices

Since 2012, the economies of the “Andean arc” (Colombia, Ecuador, Peru, Bolivia) seem to experience a paradigm shift in their economic growth model. Indeed, as a result of the upward momentum in commodity prices in the 2000s, these economies have enjoyed a remarkable cycle of economic growth and, at the same time, a primarization of their external sector. The downward trend in mineral commodity prices starting in 2012, reflecting the onset of the downturn in China, followed by the decline in oil prices since 2014, deteriorated the terms of trade of these economies and thus, affected their economic growth path. However, the resilience of these economies to this shock depends on their intrinsic characteristics.

Peru and Colombia appear more resilient, while activity in Bolivia and in particular in Ecuador contracts. These economies are gradually using a policy to change their growth patterns to reduce their dependence on the primary sector. Beyond the voluntariness of the various national authorities, the process of diversification of the growth model remains attached to the comparative advantages of each country and, secondly, to the potential productivity gains.