COMMODITY prices continued their recovery in the first quarter of 2021 and are expected to remain close to current levels throughout the year, lifted by the global economic rebound and improved growth prospects, according to the World Bank's semi-annual Commodity Markets Outlook.
"Almost all commodity prices are now above pre-pandemic levels, driven by the upsurge in economic activity, as well as some specific supply factors, particularly for oil, copper, and some food commodities," said the global lender.
However, the outlook is heavily dependent on progress in containing the COVID-19 pandemic as well as policy support measures in advanced economies and production decisions in major commodity producers.
"The durability of the recovery is highly uncertain. Emerging market and developing economies, both commodity exporters and importers, should strengthen their short-term resilience and prepare for the possibility of growth losing momentum," said Mr Ayhan Kose, World Bank Group Acting Vice President for Equitable Growth, Finance and Institutions and Director of the Prospect Group.
Energy prices are expected to average more than one-third higher this year than in 2020, with oil averaging USD 56 a barrel. Metal prices are expected to climb 30 per cent and agricultural prices are forecast to rise almost 14 per cent.
Demand for crude oil is expected to firm over 2021 as vaccines become widely available, the pandemic restrictions are eased, and the global recovery is sustained. Prices are expected to average USD 60 a barrel in 2022. However, if pandemic containment falters, a further deterioration in demand could put pressure on prices.
Metal prices are expected to give back some of this year's gains as stimulus-driven growth fades in 2022. A faster-than expected withdrawal of stimulus by some major emerging market economies could pose a downside risk to prices.
While global food commodity prices have remained stable recently, emerging evidence continues to confirm the effects of COVID-19 on food insecurity that are expected to continue through 2021 and 2022. An increasing number of countries are facing growing levels of acute food insecurity, reversing years of development gains, said the World Bank. |