The World Bank expects global energy prices to drop by 26% this year, in addition to a halving of natural gas prices in Europe and the United States between 2022 and 2023.
According to the latest World Bank forecasts, commodity prices are expected to decline by 21% in 2023 compared to last year, and the price of Brent crude will average $84 per barrel this year – down 16% from the average in 2022.
While coal prices are likely to decline by 42% in 2023, fertilizer prices will decline by 37% in 2023, which would represent their largest annual decline since 1974.
However, fertilizer prices are still close to their last high during the 2008-2009 food crisis, according to the bank.
On his part, Ayhan Kose, Deputy Chief Economist and Director of the Economic Prospects Group at the World Bank, said: “The decline in commodity prices over the past year has helped reduce global headline inflation. However, central bankers need to remain vigilant because a wide range of factors, including weaker-than-expected oil supplies, a commodity-heavy recovery in China, exacerbation of geopolitical tensions, or unfavorable weather conditions, could push prices higher, rise and ignite inflationary pressures again.”
Despite the significant declines expected this year, prices of all major commodity groups will remain well above their average levels in 2015-2019. European natural gas prices will hover at around three times their 2015-2019 average. Energy and coal prices will also remain above their pre-pandemic average.
Valerie Mercer Blackman, Senior Economist in the World Bank’s Economic Prospects Group, said: “Metal prices, which had picked up slightly early this year, are expected to decline by 8% compared to last year, primarily due to weak global demand and improved supplies. . But in the longer term, the energy transition could lead to a significant increase in demand for some metals, particularly lithium, copper and nickel.”