Segnalazione dalla World Bank - Banca Mondiale

"Dear Colleagues. 

We have just released the latest edition of the Commodity Markets Outlook.  

Commodity markets have garnered headlines of late, with oil, gold, and base metals prices rising markedly against a backdrop of elevated geopolitical tensions, tight supply conditions, and signs of firmer industrial demand. 

Questions abound as to whether these trends will continue.  

Assuming no further flare-up in geopolitical tensions, our forecasts call for a small decline in commodity prices in 2024-25.  

These projections imply a consequential change, however, given that the sharp decline in commodity prices between mid-2022 and mid-2023 played a decisive role in whittling down global inflation. 

They mean future disinflation will likely need to come from other sources. 

Risks to the commodity price forecasts are tilted to the upside. 

Foremost is the risk of conflict escalation in the Middle East, which could result in sharp energy price increases, with adverse knock-on consequences for food prices. 

I summarize the main messages of the report below (to download the full report, please use this link). 

All charts/data featured in the report and the Pink Sheet of monthly prices are available on our Commodity Markets web page. 

Please forward this message to those who might be interested in this topic. 

Thank you for your interest in our products. 

Best. Ayhan

 

• Recent developments. In recent weeks, heightened tensions in the Middle East have been exerting upward pressure on prices for key commodities, notably oil and gold. Copper prices have also reached a two-year peak, reflecting supply concerns and signs of firmer global industrial production. These developments, after commodity prices flattened out last year, suggest that disinflationary tailwinds from moderating commodity prices may have largely run their course. Indeed, the World Bank’s index of commodity prices is close to unchanged from twelve months ago. This is a consequential shift, following a nearly 40 percent plunge in commodity prices between mid-2022 and mid-2023, which helped to drive most of last year’s roughly 2-percentage-point decline in global inflation.
• Commodity price forecasts. Assuming no further flare-up in geopolitical tensions, the World Bank commodity price index is set to decline just 3 percent on average in 2024, and a further 4 percent in 2025. Non-energy commodity prices are forecast to dip 2 percent in 2024 and an additional 3 percent in 2025. Agricultural prices are also expected to soften this year and next. The metals price index is expected to see little change in 2024-25.
• Comparison with the pre-pandemic prices. Commodity prices are projected to average about 38 percent above pre-pandemic levels in 2024-25. The persistence of elevated commodity prices, relative to pre-pandemic levels, despite a broader context of subdued global GDP growth, indicates several forces at play: a tense geopolitical environment is supporting higher commodity prices, investments related to the clean-energy transition are bolstering demand for metals, and China’s rising industrial and infrastructure investment is partly offsetting the impact on commodity demand of weakness in its property sector.
• Prices of oil, gold, and copper. Unlike prices for most other commodities, oil prices are set to increase this year, before moderating somewhat next year as oil supply picks up. The average price of gold is expected to hit a record in 2024 before moderating slightly in 2025. Accelerating investment in green technologies is bolstering prices of key metals that are critical for the global clean-energy transition. For example, prices of copper—necessary for electricity-grid infrastructure and electric vehicles—are expected to rise 5% in 2024 before stabilizing in 2025.
• Risks. Risks to these forecasts are tilted to the upside, with the primary risk arising from a broadening of the conflict in the Middle East. A severe conflict-driven disruption to oil supply could see average oil prices surpass $100 per barrel this year. An energy shock of that scale could increase global inflation by about a percentage point, relative to the baseline projection, such that global disinflation could stall.
• Forecasting industrial commodity prices. High short-term volatility and significant longer-term movements in commodity prices—both features of commodity markets in recent years—present major challenges for policymakers. Such challenges are easier to meet the more accurately prices can be forecast. In a special focus, the report presents an evaluation of the performance of different approaches to forecasting the prices of three key industrial commodities—aluminum, copper, and crude oil—with four important takeaways. First, there is no “one-approach-beats-all” for commodity price forecasting. Second, macroeconometric models that can incorporate structural changes have a forecasting advantage at longer horizons. Third, a healthy dose of expert judgement is a critical complement to models, especially when confronted by unusual events. Fourth—considering the preceding findings—policymakers are likely to be best served by employing a range of approaches.

PS: For our other periodical products, please visit: Global Economic Prospects and Global Monthly. For a comprehensive look at the opportunities and risks confronting 75 countries eligible for grants and zero to low-interest loans from the World Bank’s International Development Association (IDA), see The Great Reversal. For our recent study on long-term growth, see Falling Long-Term Growth Prospects. For our databases of potential growth and inflation, see Potential Growth: A Global Database and One-Stop Source: A Global Database of Inflation. For our work on debt challenges, see Global Waves of Debt: Causes and Consequences and A Cross-Country Database of Fiscal Space. For our analytical work on topical policy issues, please visit Policy Research Working Papers."

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M. Ayhan Kose

Deputy Chief Economist and Director of Prospects Group World Bank

T +1 (202) 473-8350

E  akose@worldbank.org

W ayhankose

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