Global commodity prices are projected to decline significantly over the next two years, according to the World Bank's latest Commodity Markets Outlook released on April 29, 2025. The report forecasts a 12% decrease in 2025, followed by an additional 5% drop in 2026, bringing prices back to levels observed between 2015 and 2019. This anticipated decline is attributed to weakening global economic growth and rising trade barriers.

The World Bank's Commodity Markets Outlook is a semi-annual report that analyzes market trends for major commodity groups, including energy, metals, agriculture, precious metals, and fertilizers. It provides price forecasts for 46 commodities, offering valuable insights for policymakers, investors, and analysts.

Energy Prices

The report anticipates a significant decline in energy prices, including Brent crude oil and coal, due to ample supply and decreased demand. Notably, the rapid adoption of electric vehicles in China, the world's largest auto market, is contributing to reduced oil demand. Brent crude prices are projected to average $64 per barrel in 2025, a decline of $17 from 2024, and further decrease to $60 per barrel in 2026.

Food Prices

Food prices are expected to fall by 7% in 2025 and an additional 1% in 2026. However, this decline is unlikely to alleviate food insecurity in conflict-affected regions, as humanitarian aid diminishes and armed conflicts exacerbate hunger.

Gold Prices

In contrast to other commodities, gold prices are projected to reach a new record in 2025 amid global uncertainty before stabilizing in 2026. This trend reflects investors' preference for safe-haven assets during periods of economic instability.

Statements from World Bank Officials

World Bank Chief Economist Indermit Gill highlighted the risks associated with high price volatility and recommended that developing nations liberalize trade, strengthen fiscal discipline, and foster private investment. He stated, "Higher commodity prices have been a boon for many developing economies, two-thirds of which are commodity exporters. But now we're seeing the highest price volatility in more ... ."

Social and Economic Implications

• Inflation: The anticipated decline in commodity prices may help moderate near-term inflation, which has been previously driven by high energy costs and supply chain disruptions. Falling food and energy prices should make it easier for central banks to control inflation.

• Developing Economies: Countries that rely heavily on commodity exports may face economic challenges due to reduced revenues. The combination of high price ... could lead to fiscal deficits and hinder economic growth. Developing nations are advised to implement structural reforms to mitigate these risks.

• Food Security: Despite the projected decline in food prices, food insecurity is expected to persist in conflict-affected regions. Diminished humanitarian aid and ongoing conflicts contribute to acute hunger, underscoring the need for targeted interventions to address food shortages.

Historical Context

The projected decline in commodity prices marks a return to levels observed between 2015 and 2019, prior to the COVID-19 pandemic. During the pandemic, commodity prices experienced significant volatility due to supply chain disruptions and fluctuating demand. The current forecast suggests a stabilization of markets as supply conditions improve and global economic growth moderates.

The World Bank's projections indicate a significant shift in global commodity markets, with potential benefits for inflation control but substantial challenges for commodity-dependent economies. Policymakers must navigate these changes carefully, implementing strategies to mitigate adverse effects while capitalizing on opportunities presented by lower commodity prices.