The World Bank Group has projected a significant decline in global commodity prices, forecasting a 7% drop in both 2025 and 2026. This downward trend, which marks the fourth consecutive year of decline, is attributed to weak economic growth, a growing oil surplus, and policy uncertainty. As a result, commodity prices are expected to reach their lowest level in six years by 2026.
According to the World Bank’s latest Commodity Markets Outlook, the decline in commodity prices will have a mixed impact on the global economy. While dwindling energy prices are easing inflationary pressures, lower rice and wheat prices are reducing food costs in some developing countries. However, commodity prices remain above pre-pandemic levels, with 2025 and 2026 prices projected to be 23% and 14% higher, respectively, than in 2019.
The decline in energy prices has contributed to a decrease in global consumer-price inflation, as noted by World Bank Chief Economist and Senior Vice President for Development Economics, Indermit Gill. However, Gill cautioned that this respite is temporary and urged governments to use the opportunity to implement fiscal reforms, promote business-friendly environments, and accelerate trade and investment.
The World Bank’s Deputy Chief Economist, Ayhan Kose, emphasized that lower oil prices provide a chance for developing economies to advance fiscal reforms that promote growth and job creation. Kose recommended that countries phase out costly fuel subsidies to allocate resources to infrastructure and human capital development, creating jobs and strengthening long-term productivity.
The World Bank’s projections suggest that commodity prices will continue to decline in the coming years, with significant implications for the global economy. As governments navigate this new landscape, they must prioritize fiscal discipline, invest in human capital, and promote business-friendly policies to drive growth and job creation. By doing so, they can mitigate the risks associated with declining commodity prices and create a more sustainable economic environment. The World Bank’s forecasts serve as a reminder of the need for proactive economic management and strategic planning to ensure a stable and prosperous future.