The World Bank has projected that global energy and food prices will moderate in 2025 and 2026 as supply chains continue to recover post-Covid-19, but local experts caution that the impact could be limited in Malawi .
In its latest Commodity Markets Outlook, the Bretton Woods institution says there are several factors that complicate the benefits of declining global prices.
The World Bank projects that global energy and food prices will decrease by five percent in 2025 and two percent in 2026, following a three percent decline in 2024.
The report attributes this overall drop primarily to declining energy prices, expected to fall six percent in 2024, with further decreases of six percent in 2025 and two percent in 2026.
Reads the report in part: “The forecast assumes no prolonged escalation of ongoing armed conflicts, stable global economic growth and a steady expansion of oil supply from non-Opec [Organisation of Petroleum Exporting Countries] producers.”
Agricultural commodity prices are also expected to decrease by four percent in 2025, “reflecting increased supplies amid favourable weather conditions,” with little change forecast for 2026.
In a statement, World Bank Group chief economist and senior vice-president Indermit Gill noted that falling commodity prices and improved supply conditions could buffer against risks posed by geopolitical shocks such as the Russia-Ukraine war and the conflict in the Middle East.
“However, they will do little to relieve the burden of high food prices in developing countries, where food price inflation is twice as high as in advanced economies,” he said.
But in its Monthly Intelligence Report, the Reserve Bank of Malawi cautioned that the geopolitical tensions in the Middle East and the continued Russia-Ukraine war could disrupt global trade and supply chains, leading to higher commodity prices and inflationary pressures locally.
In an interview on Sunday, Catholic University of Malawi economics lecturer Derrick Thomo said the projected decline in global food and energy prices could offer temporary relief for households given that these essentials make up a significant portion of their daily expenses.
He cautioned that this positive impact may be limited in the short to medium-term as prices are expected to remain above pre-pandemic levels.
“For farmers focused on exports such as tobacco or tea, falling global prices may mean reduced income, which could in turn discourage planting and investment,” said Thomo.
Economic statistician Alick Nyasulu said in an interview on Sunday that the country’s reliance on maize, a staple and key driver of local inflation, will reduce the benefit of falling global food prices as fertiliser costs continue to rise.
According to the World Bank report, the fertiliser price index is expected to drop by 24 percent in 2024 and weaken further in 2025 before stabilising in 2026.
However, prices are still projected to remain above 2015-2019 levels.
In Malawi, fertiliser prices range from K82 000 to K95 000 per 50 kilogramme bag, more than twice the K22 000 recorded by the International Food Policy Research Institute in 2020.
