A World Bank report has projected a surge in industrial commodities prices in 2017, with crude oil price forecasted at an average of $55 per barrel, about 26 per cent rise from 2016 levels.
In its January 2017 Commodity Markets Outlook report, the World Bank gave a forecast of strong gains for industrial commodities, including energy and metals during the year, due to tightening supply and strengthening demands.
“Prices for most commodities appear to have bottomed out last year and are on track to climb in 2017,” Senior Economist and lead author of the Commodity Markets Outlook, John Baffes, said. “However, changes in policies could alter this path.”
The report said energy price forecast assumed that Organization of the Petroleum Exporting Countries, OPEC, member countries and other oil producers would partially comply with an agreement to limit production after a long period of unrestrained output.
On other sectors, the report said agricultural products prices were expected to rise by about one percent in 2017, with minimum increases anticipated for oils and oilseeds and raw materials.
But grains prices, the report said, are forecast to drop almost 3 percent on an improved supply outlook.
Further analysis showed that commodity-exporting emerging and developing economies were hit hard by slow investment growth, which declined significantly from 7.1 percent in 2010 to 1.6 percent in 2015.
“Investment weakness – both public and private – hinders a range of activity in commodity-exporting emerging market and developing economies,” said Director of the World Bank’s Development Prospects Group, Ayhan Kose, said.
“Most of these economies have limited policy space to counteract the slowdown in investment growth, so they need to employ measures to enhance the business environment, promote economic diversification, and improve governance to better growth prospects over the longer term,” the report noted.