Miller Magazine Issue: 156 December 2022

NEWS double their average over the past five years, while European natural gas prices could be nearly four times higher. Coal pro- duction is projected to significantly increase as several major exporters boost output, putting climate-change goals at risk. “The combination of elevated commodity prices and per- sistent currency depreciations translates into higher inflation in many countries,” said Ayhan Kose, Director of the World Bank’s Prospects Group and EFI Chief Economist, which produc- es the Outlook report. “Policymakers in emerging market and developing econ- omies have limited room to manage the most pronounced global inflation cycle in decades. They need to carefully calibrate monetary and fiscal policies, clearly com- municate their plans, and get ready for a period of even higher volatility in global fi- nancial and commodity markets.” Agricultural prices are expected to decline 5 percent next year. Wheat prices in the third quarter of 2022 fell nearly 20 percent but remain 24 percent higher than a year ago. The decline in agricultural prices in 2023 reflects a better-than-projected global wheat crop, stable supplies in the rice market, and the resumption of grain exports from Ukraine. Metal prices are projected to decline 15 percent in 2023, largely because of weaker global growth and concerns about a slowdown in China. The outlook for commodity prices is subject to many risks. Energy markets face significant supply concerns as worries about the availability of energy during the upcoming winter will intensify in Europe. Higher-than-expected en- ergy prices could feed through to non-energy prices, especially food, prolonging challeng- es associated with food insecurity. A sharp- er slowdown in global growth also pres- ents a key risk, especially for crude oil and metals prices. “The forecast of a decline in agri- cultural prices is subject to an array of risks,” said John Baffes, Senior Economist in the World Bank’s Prospects Group. “First, export disruptions by Ukraine or Russia could again interrupt global grain supplies. Second, additional increases in energy prices could exert upward pressure on grain and edible oil prices. Third, adverse weather patterns can reduce yields; 2023 is likely to be the third La Niña year in a row, potentially reducing yields of key crops in South America and Southern Africa.”