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Lifting of Iran sanctions could have major impact on energy markets

John Baffes's picture
With a lifting of sanctions in 2016, Iran could play a key role in energy markets but boosting capacity will require foreign investment, according to the World Bank’s latest edition of Commodity Markets Outlook.

Commodity prices come tumbling down

John Baffes's picture
Most commodity prices fell in the third quarter of 2015 as a result of abundant supplies and weak demand, leading to a further downward revision in price forecasts for 2015 and 2016.

Our quarterly Commodities Markets Outlook report analyzes markets for major commodities groups and forecasts prices for 46 commodities from bananas to zinc. The price declines are part of a five-year-long commodities slump.

On booms and super-cycles: China and India's central role in global commodity markets

John Baffes's picture
Global commodity prices underwent an exceptionally strong and sustained boom beginning in 2000. Unlike a typical price cycle, this boom has been characterized as a “super cycle”, i.e., a demand-driven surge in commodity prices lasting possibly decades rather than years. Many researchers say this is the fourth “super cycle” of the past 150 years. The price super cycle has been attributed to strong growth in emerging markets.

Commodities (mostly) continue to tumble

John Baffes's picture

We just published our Commodity Market Outlook for the third quarter of 2015, and report that most prices declined in the second quarter of 2015 due to ample supplies and weak demand, especially in industrial commodities (see figure below).

Energy prices rose 12 percent in the quarter, with the surge in oil offset by declines in natural gas (down 13 percent) and coal prices (down 4 percent). However, energy prices fell on average to 39 percent below 2014 levels. Natural gas prices are projected to decline across all three main markets—U.S., Europe, and Asia—and coal prices to fall 17 percent. Excluding energy, our report notes a 2 percent decline in prices for the quarter, and forecasts that non-energy prices will average 12 percent below 2014 levels this year. Iran’s new nuclear agreement with the US and other leading governments, if ratified, will ease sanctions, including restrictions on oil exports from the Islamic Republic of Iran. Downside risks to the forecast include higher-than-expected non-OPEC production (supported by falling production costs) and continuing gains in OPEC output. Possible (less likely) upside pressures may come from closure of high-cost operations—the number of operational oil rigs in the US is down 60 percent since its November high, for example—and geopolitical tensions. 

Save first, then spend: history’s lessons on the influence of low oil prices on global growth

Marc Stocker's picture
The impact of falling oil prices is becoming increasingly visible, but the global economy is yet to hit a nice stride - oil exporters face severe headwinds, oil-importing China continues to slow, other large oil-importing countries have seen mixed developments since the start of 2015, and financial market volatility has increased.

What does the end of the commodity boom mean for poverty in Latin America?

Liliana Sousa's picture
Latin America and the Caribbean (LAC) has made significant gains in poverty reduction in the 2000s - by 2013 less than a quarter of the region’s population lived on less than $4 a day and just over one in ten on less than $2.50 per day. While this implies that millions are still living in poverty, it is a big reduction from the early 2000s where more than 40 percent lived on less than $4 per day and over a quarter on less than $2.50. In the Poverty team at the World Bank, we are constantly finding that the single biggest driver of these gains has been increased labor income.

Macroeconomic implications of the recent oil price decline

Raju Huidrom's picture
Following four years of relative stability at around $105 per barrel (bbl), oil prices have declined sharply since June 2014. It is not the first sharp oil price swing: there have been five other episodes of oil price drops in excess of 30 percent and several more episodes of oil price spikes. Over the past five decades, these steep drops and spikes have stimulated an extensive literature on the macroeconomic implications of oil price swings and the channels through which they operate.

Weekly Wire: The Global Forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

Facebook Reaches a Landmark 100-Million Users in Africa Through Mobile
Thanks to mobile connectivity, half of Africa's 200-million internet users were accessing Facebook on a monthly basis in June 2014, indicating that the social media giant's efforts at penetrating emerging market are paying off. There's explosive growth and incredible momentum across Africa. "We now have 100-million people coming to Facebook every month across the African continent with more than 80% using mobile devices," says Nicola Mendelsohn, Facebook vice president for Europe, Middle East and Africa.

UNICEF's Hidden in Plain Sight report details child homicides, domestic violence in 190 countries
Radio Australia
One in five homicide victims worldwide are children, a report by UN children's agency UNICEF has revealed. The Hidden in Plain Sight report analyses data from 190 countries and lists alarming statistics on child homicides, domestic violence and rape. The report found violence against children was most common in the home and with caregivers.  UNICEF spokesman for Eastern and Southern Africa, James Elder, said the report may not even capture the full extent of the problem.   "Violence is a very difficult thing often to detect, it goes grossly unreported, so one of the terrifying things from this report is knowing that in fact the numbers would be lower than the reality," he said.

Commodity Markets Outlook - January 2014

John Baffes's picture
The World Bank just published its January 2014 Commodity Outlook. With the exception of energy, all the key commodity price indices declined significantly in 2013. Fertilizer prices led the decline, down 17.4 percent from 2012, followed by precious metals (down almost 17 percent), agriculture (-7.2 percent), and metals (-5.5 percent).