World Bank: Energy Price Surge Jeopardizes Economic Growth

VIENNA (DTN) – The World Bank Group in its latest Commodity Markets Outlook released last week forecast energy prices to surge by 24% this year to their highest level since Russia’s invasion of Ukraine in 2022.

Overall commodity prices are projected to rise by 16% on the back of the largest energy supply crisis in history and record-high prices for key metals. This price surge will negatively impact economic growth and job creation, the report said.

“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” said Indermit Gill, Chief Economist at the World Bank Group.

The report also highlighted the outsized impact of geopolitically driven oil supply cuts. A 1% decline in production leads to an average price increase of 11.5%, the World Bank Group said. These effects spill over into other commodity markets with delayed effect, with the peak in natural gas prices typically occurring a year after the initial oil price shock.