“The war in Ukraine has caused a major shock to commodity markets and changed the pattern of global trade, production and consumption“, notes the World Bank which published a report on Tuesday.
The authors believe that “prices will remain at historically high levels until the end of 2024They point out that the rise in energy prices over the past two years has been the largest since the 1973 oil crisis.
“That of food raw materials – of which Russia and Ukraine are major producers – and fertilizers, whose production depends on natural gas, has never been so strong since 2008“, comments the institution in a press release. “Overall, this is the biggest commodity shock we’ve seen since the 1970s.“.
50% increase in energy prices in 2022
“This shock is compounded by an upsurge in restrictions on trade in food, fuel and fertilizers“said Indermit Gill, World Bank Vice President for Equitable Growth, Finance and Institutions, adding that this raises the “specter of stagflation“.
For energy prices alone, the Bank expects an increase of more than 50% this year before a drop in 2023 and 2024.
As for those of non-energy goods, such as agricultural products and metals, they are expected to increase by almost 20% in 2022, then also decrease in the following years.
“However, commodity prices are expected to remain well above the average of the past five years and, in the event of a prolonged war or new sanctions once morest Russia, they might become even higher and more volatile than currently expected.“, warns the Bank.
These price increases havea considerable human and economic cost and risk hampering progress in poverty reduction“, she also laments.