The World Bank has forecast the ongoing war in the Middle East to unleash the steepest global energy price surge in four years, stocking fresh concerns over inflation, food security and economic growth in import-dependent economies such as Malawi.
A new World Bank Commodity Markets Outlook warns that energy prices are projected to rise by 24 percent in 2026, pushing overall commodity prices up by 16 percent, driven by disruptions to oil supply and shipping routes.
The report attributes the surge to attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz, a critical corridor that handles about 25 percent of global seaborne crude oil trade and other commodities, resulting in one of the largest oil supply shocks.
In an e-mailed statement on Wednesday, World Bank Group chief economist Indermit Gill said the effects of the conflict are cascading through the global economy.
“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices and finally, higher inflation,” he said, warning that rising prices will push up interest rates and worsen debt burdens.
For Malawi, which relies heavily on fuel and fertiliser imports, the shock is likely to transmit through the economy, increasing transport costs, raising the price of goods and putting pressure on already strained foreign exchange reserves.
Scotland-based Malawian economist Velli Nyirongo, in an interview on Wednesday, observed that the external shocks emanating from the conflict in the Middle East will affect the country’s economy, especially through the disruptions to the global fuel supply chain.
He said: “Malawi imports most of its petroleum products, so any disruption to global oil supply or rise in prices directly increases domestic inflation, transport costs, and production expenses.
“Higher fuel costs spread quickly across the economy because they raise costs in agriculture, manufacturing and distribution.”
The World Bank report further shows that fertiliser prices are expected to rise by 31 percent, driven by a 60 percent increase in urea prices, worsening affordability for farmers and threatening crop yields.
These pressures could have significant implications for food security, with the World Food Programme warning that up to 45 million more people globally could fall into acute food insecurity if the conflict persists.
Economics Association of Malawi president Bertha Bangara Chikadza warned that the disruptions to fertliser supply could also affect Malawi, a predominantly agrarian economy.
“The rising commodity prices are expected to fuel inflation and slow growth across developing economies,” sje said.
The agriculture sector supports more than 80 percent of the country’s population and contributes about 25 percent to the gross domestic product.
World Bank Group deputy chief economist Ayhan Kose has urged governments to adopt targeted policy responses.
