The Russia-Ukraine conflict has upended commodity markets, altering global trade, production and consumption patterns that will keep food and energy prices at “historically high levels” until 2024, the World Bank has said.
The surge in energy prices over the past two years has been the largest since the 1973 oil crisis, the Washington-based lender said in its latest commodity markets outlook.
Meanwhile, the increase in the prices of food commodities — of which Russia and Ukraine are large producers — and fertilisers, which rely on natural gas as a production input, have been the largest since 2008.
“Overall, this amounts to the largest commodity shock we have experienced since the 1970s … the shock is being aggravated by a surge in restrictions in trade of food, fuel and fertilisers,” said Indermit Gill, World Bank vice president for equitable growth, finance and institutions.
Because of the war-related trade and production disruptions, the price of Brent — the global benchmark for two thirds of the world's oil — is expected to average $100 a barrel this year, its highest level since 2013, after increasing by more than 40 per cent annually, the World Bank said.
However, prices are expected to moderate to $92 next year — well above the five-year average of $60 a barrel.
Energy prices are expected to rise more than 50 per cent this year before easing in 2023 and 2024. Non-energy prices, including agriculture and metals, are projected to increase by about 20 per cent in 2022 before moderating in the coming years.
Commodity prices are projected to remain well above the most recent five-year average. In the event of a prolonged war or additional sanctions on Russia, prices could be even higher and more volatile than currently projected, the report said.
“These developments have started to raise the spectre of stagflation. Policymakers should take every opportunity to increase economic growth at home and avoid actions that will bring harm to the global economy,” Mr Gill said.
In economics, stagflation is a term for when inflation is high and economic growth is sluggish. Unemployment often rises sharply.
The International Monetary Fund expects inflation to hit 5.7 per cent in advanced economies and 8.7 per cent in emerging market and developing economies, respectively, this year.
Inflation in 2023 is projected at 2.5 per cent for advanced economies and 6.5 per cent for emerging markets and developing states.
Commodity markets are experiencing one of the largest supply shocks in decades because of the war in Ukraine, said Ayhan Kose, director of the World Bank’s Prospects Group that produces the outlook.
“The resulting increase in food and energy prices is taking a significant human and economic toll … it will likely stall progress in reducing poverty. Higher commodity prices exacerbate already elevated inflationary pressures around the world,” Mr Kose said.
Wheat prices are expected to jump more than 40 per cent, reaching a record high in nominal terms this year, putting pressure on developing economies that rely on wheat imports, especially from Russia and Ukraine, the World Bank said.
Metal prices are forecast to increase 16 per cent in 2022 before easing in 2023. However, they will remain at elevated levels.
“Commodity markets are under tremendous pressure, with some commodity prices reaching all-time highs in nominal terms,” said John Baffes, a senior economist in the Prospects Group.
“This will have lasting knock-on effects. The sharp rise in input prices, such as energy and fertilisers, could lead to a reduction in food production, particularly in developing economies,” he said.
The report said the war’s impact could be last longer than previous shocks for at least two reasons.
First, there is less room to substitute the most affected energy commodities for other fossil fuels because price increases have been broad-based across all fuels.
Second, the increase in the prices of some commodities is also driving up other prices. For example, high natural gas prices have raised the cost of fertiliser, making agricultural products more expensive.
The World Bank urged policymakers to act promptly to minimise the risk of harm to their citizens and to the global economy. It called for safety net programmes such as cash transfers, school-feeding programmes and public work initiatives, rather than food and fuel subsidies.
Hotel Silence
Auður Ava Ólafsdóttir
Pushkin Press
UAE currency: the story behind the money in your pockets
Our Time Has Come
Alyssa Ayres, Oxford University Press
UAE squad
Esha Oza (captain), Al Maseera Jahangir, Emily Thomas, Heena Hotchandani, Indhuja Nandakumar, Katie Thompson, Lavanya Keny, Mehak Thakur, Michelle Botha, Rinitha Rajith, Samaira Dharnidharka, Siya Gokhale, Sashikala Silva, Suraksha Kotte, Theertha Satish (wicketkeeper) Udeni Kuruppuarachchige, Vaishnave Mahesh.
UAE tour of Zimbabwe
All matches in Bulawayo
Friday, Sept 26 – First ODI
Sunday, Sept 28 – Second ODI
Tuesday, Sept 30 – Third ODI
Thursday, Oct 2 – Fourth ODI
Sunday, Oct 5 – First T20I
Monday, Oct 6 – Second T20I
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.4-litre%204-cylinder%20turbo%20hybrid%0D%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20366hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E550Nm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESix-speed%20auto%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh360%2C000%0D%3Cbr%3E%3Cstrong%3EAvailable%3A%20%3C%2Fstrong%3ENow%0D%3C%2Fp%3E%0A
JAPAN SQUAD
Goalkeepers: Masaaki Higashiguchi, Shuichi Gonda, Daniel Schmidt
Defenders: Yuto Nagatomo, Tomoaki Makino, Maya Yoshida, Sho Sasaki, Hiroki Sakai, Sei Muroya, Genta Miura, Takehiro Tomiyasu
Midfielders: Toshihiro Aoyama, Genki Haraguchi, Gaku Shibasaki, Wataru Endo, Junya Ito, Shoya Nakajima, Takumi Minamino, Hidemasa Morita, Ritsu Doan
Forwards: Yuya Osako, Takuma Asano, Koya Kitagawa
if you go
The flights
Air France offer flights from Dubai and Abu Dhabi to Cayenne, connecting in Paris from Dh7,300.
The tour
Cox & Kings (coxandkings.com) has a 14-night Hidden Guianas tour of Guyana, Suriname and French Guiana. It includes accommodation, domestic flights, transfers, a local tour manager and guided sightseeing. Contact for price.
Kanye%20West
%3Cp%3EYe%20%E2%80%94%20the%20rapper%20formerly%20known%20as%20Kanye%20West%20%E2%80%94%20has%20seen%20his%20net%20worth%20fall%20to%20%24400%20million%20in%20recent%20weeks.%20That%E2%80%99s%20a%20precipitous%20drop%20from%20Bloomberg%E2%80%99s%20estimates%20of%20%246.8%20billion%20at%20the%20end%20of%202021.%3Cbr%3EYe%E2%80%99s%20wealth%20plunged%20after%20business%20partners%2C%20including%20Adidas%2C%20severed%20ties%20with%20him%20on%20the%20back%20of%20anti-Semitic%20remarks%20earlier%20this%20year.%3Cbr%3EWest%E2%80%99s%20present%20net%20worth%20derives%20from%20cash%2C%20his%20music%2C%20real%20estate%20and%20a%20stake%20in%20former%20wife%20Kim%20Kardashian%E2%80%99s%20shapewear%20firm%2C%20Skims.%3C%2Fp%3E%0A
French business
France has organised a delegation of leading businesses to travel to Syria. The group was led by French shipping giant CMA CGM, which struck a 30-year contract in May with the Syrian government to develop and run Latakia port. Also present were water and waste management company Suez, defence multinational Thales, and Ellipse Group, which is currently looking into rehabilitating Syrian hospitals.
Zayed Sustainability Prize
UAE currency: the story behind the money in your pockets
The bio
Who inspires you?
I am in awe of the remarkable women in the Arab region, both big and small, pushing boundaries and becoming role models for generations. Emily Nasrallah was a writer, journalist, teacher and women’s rights activist
How do you relax?
Yoga relaxes me and helps me relieve tension, especially now when we’re practically chained to laptops and desks. I enjoy learning more about music and the history of famous music bands and genres.
What is favourite book?
The Perks of Being a Wallflower - I think I've read it more than 7 times
What is your favourite Arabic film?
Hala2 Lawen (Translation: Where Do We Go Now?) by Nadine Labaki
What is favourite English film?
Mamma Mia
Best piece of advice to someone looking for a career at Google?
If you’re interested in a career at Google, deep dive into the different career paths and pinpoint the space you want to join. When you know your space, you’re likely to identify the skills you need to develop.
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
RESULT
Norway 1 Spain 1
Norway: King (90 4')
Spain: Niguez (47')
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
FFP EXPLAINED
What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.
What the rules dictate?
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.
What are the penalties?
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.
