Shock from rising world food and fuel prices linked to Russia’s invasion of Ukraine is expected to last until at least the end of 2024 and increases the risk of stagnant inflation, warns the World Bank in its most recent Commodities Market Outlook report.
In its first comprehensive analysis of the impact of war on commodity markets, the World Bank, which provides loans and grants to low- and middle-income countries, said the world is facing the biggest shock in commodity markets. since the 1970s. It is exacerbated, he says, by restrictions on trade in food, fuel and fertilizers that are exacerbating already rising inflationary pressures around the world.
As a result, the World Bank expects energy prices will increase over 50% in 2022 before easing in 2023 and 2024, while non-energy commodity prices, including those of agriculture and metals, will rise by almost 20% in 2022 before declining.
The war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024. https://t.co/zth9o7XvWi # CMO2022 pic.twitter.com/ASOzYi2HIc
– World Bank (@WorldBank) April 26, 2022
The bank said commodity prices would fall only slightly, staying well above the most recent five-year average in the medium term.
“In the event of a prolonged war, or additional (Western) sanctions on Russia, prices could be even higher and more volatile than currently predicted,” he said.
In terms of policy response to the crisis, the World Bank singles out tax cuts and subsidies that, it says, tend to exacerbate supply shortages and price increases, instead calling for school meal programs, as well as and cash transfers and public employment programs for vulnerable groups.
“Policymakers should seize every opportunity to boost economic growth in their country and avoid actions that affect the global economy,” said Intermit Jill, vice president for the World Bank for Fair Development, the Financial Sector and the Institutions. .
Russia is the largest exporter gas and fertilizers in the world, and the second largest exporter of crude oil. Together with Ukraine, they account for almost a third of world wheat exports, 19% of maize exports and 80% of sunflower oil exports.
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