WB warns 40m people risk extreme poverty amid commodity price surge

Global commodity prices could rise by as much as 23% towards the end of this year, the World Bank has forecast, warning that more than 40 million people could be pushed into extreme poverty if the situation worsens.

The increase could be driven by conflicts in the Middle East, the Russia-Ukraine war and adverse weather conditions, among other factors, according to the World Bank's October Commodity Markets Outlook.

The report also said the World Bank had already provided nearly $8.75 billion in loan assistance to 25 countries to help them cope with the crisis.

Energy prices have already risen by 32%, marking their highest level since the Russia-Ukraine war began.

The report warned that the Middle East crisis could reduce global oil supplies by 5.2%, potentially marking the largest decline in four decades since the Covid-19 pandemic.

Food commodities, including rice and wheat, are also on the list of products facing price increases. Disruptions to supplies through the Black Sea due to the Russia-Ukraine war could push food prices up by more than 10% by the end of the year.

The World Bank forecast that the adverse effects of El Niño, described in the report as the most intense since 1950, could further deepen the crisis.

Prices of industrial metals could also increase by 25%. Rising demand from renewable energy projects, electric vehicles and data centres could push aluminium, copper and tin prices to record levels.

Meanwhile, precious metal prices could rise by as much as 40% as investors seek safe-haven assets amid global uncertainty.

Analysts warn that more than 40 million people could fall into poverty if conditions deteriorate further.

The World Bank, however, projected that commodity prices could decline by up to 7% next year.

It also warned that supply chain disruptions and geopolitical tensions could complicate efforts to control inflation, forcing central banks in different countries to adjust their monetary policies.