We forget that commodity prices are driving the growth in many emerging market countries. Across Latin America, commodity exports present anywhere form from just under 30% of GDP in Ecuador to about 5% in Brazil.
The terms of trade have been made favorable given the gain in commodity prices but a global decline will shrink those gains. With a decline in commodity prices, tax revenue will decline, investment will fall, and currencies will depreciate. The gains of the last five years will be significant and more telling than the setbacks from 2008.
Peru's finance minister Luis Castilla says he lights a candle and prays that China won't crash
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