World Bank study on Energy Prices
The World Bank recently released the October 2022 edition of the Commodity Markets Outlook.
What are the key findings of the Commodity Markets Outlook report?
- The projections of commodity prices are subject to numerous risks. Energy markets are facing significant supply-related distress due to concerns regarding their availability during the winter season.
- Higher-than-expected energy prices could lead to a spike in non-energy commodities’ prices, especially food. This will prolong the challenges associated with food insecurity and slowdown the global economic growth.
- The falling value of currencies of most developing economies is the major cause of the rising prices of food and energy. Almost 60 per cent of oil-importing emerging market and developing economies witnessed a surge in energy inflation between February and end of October this year.
- High energy prices are causing food inflation since agricultural production is highly reliant on energy commodities. During the first three quarters of 2022, food inflation in South Asia averaged higher than 20 per cent. Except East Asia and the Pacific, other regions witnessed the average of food inflation ranging between 12 and 15 per cent. East Asia and the Pacific saw low food inflation partly because of stable prices of rice – the region’s staple food.
- Since the Ukrainian war broke out, energy price has remained volatile. However, it is expected to ease. After increasing by 60 per cent in 2022, the energy prices are expected to decline 11 per cent in 2023. However, the energy prices will remain 75 per cent above the average over the last 5 years.
- Agricultural prices are projected to decrease five per cent in 2023. This decline will be ensured by the better-than-projected global supply of wheat, stable supply of rice and resumption of grain exports from Ukraine.
- Prices of metals are expected to decline by 15 per cent in 2023 mainly because of weaker global economic growth and economic slowdown in China.
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Month: Current Affairs - October, 2022
Category: Economy & Banking Current Affairs • Reports & Indexes Current Affairs