On October 27th, the World Bank warned that currency contraction in most developing economies has led to higher food and fuel prices, which could exacerbate food and energy crises.
In the October 2022 Commodity Markets Outlook, the World Bank stated that most primary commodity prices at dollar value had fallen below peak levels due to fears of an imminent global recession.
The World Bank mentioned in its document that, as a result of the depreciation of currencies, nearly 60 percent of emerging market economies and oil-importing developing economies experienced higher oil prices in local currency during this period. Adding that about 90 percent of these economies experienced a greater increase in wheat prices in local currencies compared to the prices in the US dollar.
During the first three quarters of 2022, South Asia’s food price inflation averaged more than 20 percent. In other regions, including Latin America and the Caribbean, the Middle East and North Africa, sub-Saharan Africa, Eastern Europe, and Central Asia, food price inflation averaged between 12 percent and 15 percent.
Pablo Saavedra, Vice-President of the World Bank for Equitable Growth, Finance, and Institutions, considered that “although the prices of many primary commodities have fallen below their peak levels, they are still high compared to their averages over the past five years,” warning that another surge in food prices on the international level would prolong the challenges of food insecurity in various developing countries.
For his part, Ayhan Kose, Chief Economist for Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group considered that “some countries should be cautious in defining their monetary and fiscal policies, clearly articulating their plans and preparing for a period of further volatility in the global financial and primary commodity markets.”
The International Finance Corporation (IFC) noted that there were many risks affecting the prospects for commodity prices, highlighting that if global growth rates slowed further, they could also entail significant risks, particularly for crude oil and mineral prices.