Via Reuters
Global commodity prices are expected to decline significantly over the next two years as slowing global growth and rising trade tensions weigh on demand, according to the World Bank’s latest Commodity Markets Outlook report released Tuesday.
The report projects a 12% drop in commodity prices in 2025, followed by a further 5% decline in 2026. In real terms, this would bring prices down to their lowest levels of the decade, aligning with the 2015-2019 average and effectively closing the chapter on the price surge driven by the post-pandemic recovery and the fallout from Russia’s 2022 invasion of Ukraine.
While the decline may help ease short-term inflation pressures exacerbated by new U.S. tariffs and increasing global protectionism, it poses significant risks for developing economies that rely heavily on commodity exports.
“Higher commodity prices have supported many developing countries — two-thirds of them depend on commodities,” said World Bank Chief Economist Indermit Gill. “But we’re now facing the highest price volatility seen in over 50 years. This mix of low prices and high volatility is deeply concerning.”
Gill urged commodity-dependent nations to pursue policies that include liberalizing trade, restoring fiscal discipline, and fostering environments more conducive to private investment.
The report highlights how energy prices, which added more than two percentage points to global inflation in 2022, have since retreated, helping to temper inflation in 2023 and 2024. Energy prices are forecast to fall by 17% in 2025 — reaching their lowest level in five years — and decline another 6% in 2026.
Brent crude oil prices are expected to average $64 per barrel in 2025, down $17 from 2024, before dropping to $60 in 2026. The fall is attributed to abundant supply and reduced demand, driven in part by the rapid adoption of electric vehicles, particularly in China, the world’s largest automotive market.
Coal prices are also expected to drop sharply, with a 27% decrease projected in 2025 and an additional 5% in 2026, reflecting slower growth in coal-based power generation in developing countries.
Food prices are projected to decline by 7% in 2025 and by a further 1% in 2026. However, the World Bank cautions that this will offer little relief for vulnerable populations facing food insecurity, as shrinking humanitarian aid and ongoing conflicts continue to drive hunger crises.
In contrast to most commodities, gold prices are forecast to hit a record high in 2025 as investors seek safe-haven assets amid mounting economic uncertainty. Prices are expected to stabilize in 2026.
