The World Bank has published its latest Commodity Markets Outlook and projected that global commodity prices may fall 12% this year, and another 5% next.
The resulting decrease could bring commodity prices to their lowest levels since 2020s. Even though this decline could moderate near-term inflation risks emerging from rising trade barriers, it could also hamper prospects for economic progress in two out of every three developing economies, the organization said.
"Higher commodity prices have been a boon for many developing economies, two-thirds of which are commodity exporters," World Bank Chief Economist Indermit Gill said in a statement.
"But now we're seeing the highest price volatility in more than 50 years. The combination of high price volatility and low prices spells trouble."
According to him, developing economies would need to take crucial steps to offset the decline, such as restore fiscal discipline, create a more business-friendly environment to attract private capital, and to liberalise trade as much as possible.
Energy prices are expected to fall by 17% to their lowest level in five years before dropping another 6% in 2026, the report said. Meanwhile, gold prices are likely to set a new record in 2025 as investors seek safe havens for capital amid rising uncertainty, but the price will stabilize in 2026, the World Bank added.
Theodor Lisovoy, Managing Editor, Rough&Polished
