Global commodity prices are set to drop to their lowest levels in a decade due to sluggish economic growth and abundant oil supply, the World Bank stated in a report shared with PUNCH Online on Tuesday.
According to the Bank’s latest Commodity Markets Outlook, global commodity prices are projected to decline by 12% in 2025 and a further 5% in 2026, reaching levels last seen in 2020. While nominal prices will remain above pre-pandemic levels, inflation-adjusted prices are expected to dip below the 2015–2019 average for the first time, signaling the end of a post-pandemic and conflict-driven commodity boom.
The World Bank noted that while falling prices could ease short-term inflationary pressures exacerbated by global trade barriers, they may also pose serious risks for developing economies—two-thirds of which rely heavily on commodity exports.
Indermit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank Group, said: Higher commodity prices have benefited many developing countries, but we are now experiencing the highest price volatility in over 50 years. The combination of falling prices and rising volatility is a serious concern.
Gill advised developing economies to protect themselves by restoring fiscal discipline, improving the business environment to attract investment, and liberalizing trade where possible.
The report highlighted that commodity markets have endured an exceptionally volatile decade, shaped by the COVID-19 pandemic, the war in Ukraine, rising geopolitical tensions, climate-related disruptions, and weakening global growth. Volatility in this period has surpassed that of any decade since the 1970s.
The World Bank warned that this unpredictability could become the new normal, especially amid growing global demand for critical minerals and recurring natural disasters.
Energy prices, a major driver of inflation in recent years, are expected to fall by 17% in 2025—reaching their lowest levels in five years—and by another 6% in 2026. Brent crude oil prices are forecast to average $64 per barrel in 2025 (down $17 from 2024) and $60 in 2026. Coal prices are also expected to drop by 27% this year and another 5% in 2026 due to reduced demand in developing economies.
The Bank concluded that to navigate these economic headwinds, developing countries must build fiscal buffers, strengthen institutions, and create investment-friendly environments to support job creation and economic stability.