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commodity prices

Argentina’s chance to leap ahead

Sri Mulyani Indrawati's picture

View from Villa 31 in Buenos Aires, Argentina. © Mary Stokes/World Bank

So far, 2016 has been a year filled with challenges and uncertainties. Global economic growth is weak, commodity prices remain low, and international trade isn’t picking up. In fact, voters around the world are questioning long-held beliefs in open markets, and populists are exploiting their fears by suggesting divisive policies and promising easy solutions to complex issues. Against this backdrop, it would seem that staying afloat is already a remarkable feat by any country.
 
But to make progress in the fight against poverty and to reactivate economic activity to provide opportunities for all, countries have to do much more. They have to tackle necessary and sometimes difficult reforms, deal with tradeoffs, but most of all, they need to stay focused on what is good for most people in the long-term.

Amid growing risks, will leaders protect the poor?

Sri Mulyani Indrawati's picture
© Ashraf Saad Allah AL-Saeed / World Bank


There is enough trouble out there to keep any policymaker up at night. Recent volatility has roiled Chinese and global stock markets, commodity prices have slumped, and security concerns are rising. All of this raises serious questions over the health of the global economy. This year could shape up to be risky, full of challenges and concerns for the fight against poverty.  
 
We ended 2015 with good news: For the first time in history, the number of extremely poor people dropped below 10% of the world’s population. The new Sustainable Development Goals and the Paris climate deal bring momentum to our effort to lift the remaining 700 million extremely poor people out of poverty while generating climate-smart economic growth.

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.
 

Despite low commodity prices, growth prospects in low-income countries remain robust

Gerard Kambou's picture
Large agricultural sectors, remittances, and public investment have cushioned the impact of sharply weaker terms of trade in commodity-exporting low-income countries (LICs). Growth in LICs was flat in 2014, but is expected to pick up in 2015 and remain robust during 2016–17.  Declining commodity prices, however, are likely to increasingly put pressure on fiscal and current account balances of LICs that rely heavily on exports of energy and metals. Many commodity-exporting LICs have limited buffers to absorb this deterioration.

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. 

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.

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).

Elephants and Macro-Financial Linkages

Otaviano Canuto's picture
Global financial integration and the linkages between the financial and the real sides of economies are sources of huge policy challenges. This is now beyond doubt, after what we saw in the run-up to and the unfolding of the 2008 global financial crisis.

Prospects Weekly: Renewed Euro Area tensions cut into capital flows to developing countries in May and June

Global Macroeconomics Team's picture

Renewed Euro Area tensions cut into capital flows to developing countries in May and June, and prompted a sharp downturn in business sentiment worldwide. Together these developments point to slower growth in 2012Q2 and Q3, unless recent improvements in financial markets and policy steps cause business sentiment to strengthen.


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