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World Bank projects Commodity prices to hit lowest level in six years, dropping 7% in 2025 and 2026.
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Report cites weak growth, oil surplus, and policy uncertainty as major factors.
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World Bank urges governments to reform fiscal policies and phase out costly subsidies.
The World Bank Group has forecast that global commodity prices will fall to their lowest level in six years by 2026, signalling a continued decline for the fourth consecutive year.
In its latest Commodity Markets Outlook report, the Bretton Woods institution projected a 7 per cent drop in commodity prices for both 2025 and 2026, attributing the decline to sluggish global growth, rising oil surpluses, and persistent policy uncertainty.
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While falling energy prices have helped ease global inflation and lowered food costs in several developing economies, the World Bank noted that overall commodity prices still remain higher than pre-pandemic levels.
According to the report, average commodity prices in 2025 and 2026 are expected to be 23 per cent and 14 per cent higher than in 2019, respectively.
World Bank Chief Economist and Senior Vice President for Development Economics, Indermit Gill, said the decline in energy prices has helped cool consumer inflation worldwide but warned that the relief may be temporary.
“Governments should use this period to get their fiscal house in order, make economies business-ready, and accelerate trade and investment,” Gill stated.
Also speaking, the Bank’s Deputy Chief Economist, Ayhan Kose, described the current trend as a chance for developing nations to reform their fiscal systems and stimulate sustainable job growth.
Director of the Prospects Group, Ayhan Kose, further advised governments to phase out expensive fuel subsidies and redirect funds toward infrastructure, human capital, and long-term productivity.
He explained that such reforms would “help shift spending from consumption to investment, rebuild fiscal space, and support more durable job creation.”
