The World Bank has warned of a significant decline in global commodity prices over the next two years, as sluggish economic growth and rising trade tensions weigh on demand.
The bank forecasts a 12% drop in prices in 2025, followed by another 5% decline in 2026—bringing real prices down to their lowest point in years.
According to the bank’s Commodity Markets Outlook report, inflation-adjusted commodity prices are likely to return to averages recorded between 2015 and 2019, signaling the end of the price surge that followed the COVID-19 recovery and the 2022 Russia-Ukraine war.
Lower Prices: A Mixed Bag for the Global Economy
While falling prices could ease inflation fueled by high tariffs and trade restrictions, they also pose serious risks to emerging economies that depend heavily on commodity exports.
Indermit Gill, the World Bank’s Chief Economist, said that while high commodity prices supported many developing countries, the current price volatility—combined with falling values—could have devastating consequences.
Gill urged these nations to open up trade where feasible, reduce public spending, and foster a more attractive environment for private investment.
Energy and Food: Dual Pressure Points
Energy prices are projected to decline by 17% in 2025 and another 6% in 2026, marking the lowest levels in five years.
The World Bank expects Brent crude oil to average $64 per barrel in 2025, down from around $81 in 2024, before dipping further to $60 in 2026. These declines are driven by increased supply and reduced demand, particularly due to the rapid growth of electric vehicle adoption in China.
Coal prices are also expected to drop—27% in 2025 and 5% more in 2026—as reliance on coal for electricity generation slows across emerging markets.
Food and Gold: Diverging Paths
Food prices are forecasted to fall 7% in 2025 and 1% in 2026. However, this relief is unlikely to resolve food insecurity in the world’s most vulnerable regions, especially as humanitarian aid shrinks and armed conflicts persist.
In contrast, gold prices are expected to hit new records in 2025, as investors seek safe havens amid growing economic uncertainty, before stabilizing during 2026.
