Britain’s BBC and the Guardian reported on the 26th (local time) that the World Bank has warned of the possibility of the biggest price shock and stagflation in more than 50 years due to soaring food and energy prices caused by the Ukraine war.
In a product market outlook report released on the same day, the World Bank pointed out that the global economy risks facing stagflation again in the 1970s as food and energy prices, which have soared due to the Ukrainian war, remain much the same for the next three years.
World Bank economist Peter Nigel, co-author of the report, said, “The rise in prices has a huge economic and humanitarian impact, and households around the world are feeling a cost-of-living crisis. We are particularly concerned about poor families who spend most of their income on food and energy.”
The sector that is expected to see the biggest price increase is Europe’s natural gas, which has more than doubled in price since April 2020. The World Bank expects natural gas prices to fall next year and 2024, but they will remain more than 15% higher than last year.
Oil prices are also expected to put inflationary pressure on the global economy by maintaining the price of Brent crude around $100 a barrel by 2024.
Russia produces 11% of the world’s crude oil production, ranking third in the world, accounting for 40% of natural gas imported by Europe and 27% of oil.
The World Bank predicted that food, which has already risen sharply, will continue to remain high in the future. The U.N. food price index is already at its highest level since it was introduced 60 years ago.
Wheat prices were expected to rise 42.7 percent in dollar terms due to sharp declines in exports from Ukraine and Russia, while barley was expected to rise 33.3 percent, soybeans 20 percent, edible oil 29.8 percent and chickens 41.8 percent, respectively.
According to JP Morgan and S&P Global, Ukraine and Russia accounted for 28.9 percent of the world’s wheat exports before the war and 60 percent of the supply of sunflower seeds, which are important for food processing.
Prices of other raw materials such as fertilizers, metals, and minerals were also expected to rise.
