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Developing countries are in trouble due to the increase in
the price of goods in the international market. In this regard, the World Bank
has said Bangladesh as an example, due to the increase in the price of LNG in
the European market, Bangladesh is in trouble. Power generation in Bangladesh
is being disrupted. Extensive load shedding has to be done for this. Because
Bangladesh is not able to buy this fuel from the spot market due to the
increase in the price of LNG. Pakistan's situation is similar to that of
Bangladesh.
Last Wednesday (October 26, 2022), the World Bank published
its latest Commodity Market Outlook. There, this example of Bangladesh is
highlighted to explain the effect of the increase in the price of goods in the
world market.
According to the World Bank report, various risks have been created around the world due to the increase in the prices of essential products. Due to supply disruptions, there has been volatility in the fuel market. This may cause a crisis in Europe next winter. The World Bank also believes that if the price of energy products increases more than expected, it may pose a challenge to food security. On the other hand, there is also a risk of a decrease in the global average growth, said the organization.
According to the World Bank, the prices of food products and
fuel oil are increasing in developing countries due to devaluation of their
respective countries' currencies. Many countries are already in trouble with
this. Ever since Russia's invasion of Ukraine in February, the world has been
concerned. Brent crude oil prices fell 9 percent. However, due to the
devaluation of local currencies, around 60 percent of oil importing developing
countries have increased the price of fuel oil in the local market.
In South Asia, the report said, rising oil prices are
disrupting agricultural production, which is driving up food prices. In the
three quarters of this year, the price inflation of food products in South Asia
has been more than 20 percent. This has also affected other parts of the world.
In Latin America, the Caribbean, North America, the Middle East, Sub-Saharan
Africa, Eastern Europe, food inflation rates range from 12 to 15 percent. The
World Bank says rising commodity prices next year will prolong inflationary
pressures.
World Bank Vice President Pablo Sabedra said the prices of
many daily commodities are currently at their highest levels. This price is
much higher than the average price of the last few years. In this situation, if
the price of food products increases again, then the food security of
developing countries may face a challenge. For this, it is necessary to quickly
adopt necessary policies in various sectors including supply system,
distribution, increasing income.
According to the World Bank report, the market of energy
products started to become unstable after the Russia-Ukraine war. Now different
countries of the world are waiting for the reduction in the price of energy
products. The World Bank predicts that the price of energy products will
decrease slightly in the coming year after increasing by almost 60 percent in
2022. According to the World Bank forecast, the price of energy products will
decrease by 11 percent in 2023. Even if the price drops to the mid-point, it
will still be 75 percent above the average price of the last 5 years. The World
Bank also says that the average price of Brent crude oil in 2023 could be $92
per barrel. The average price of Brent crude oil for the last five years was $60
per barrel. Natural gas and coal prices hit record highs in 2022. These two
products may get some relief in the coming year. Still, Australian coal and US
natural gas prices will be double their five-year average.
According to the World Bank, prices of agricultural products
may fall by 5 percent in 2023. In the last three quarters of this year, the
price of wheat has decreased by 20 percent. However, it is 24 percent higher
than the price a year ago. The World Bank has predicted several reasons behind
the decline in prices of agricultural products in 2023. These are the increase
in wheat production, stability in the supply system in the rice market,
resumption of export of agricultural products from Ukraine, etc.
Source:
Online/SZK
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