Only hope is the end of Ukraine war—Bank
Malawians will continue to dig deeper into their pockets to eke a living as World Bank says the only hope towards the end of current increases in price of commodities on the global scene is the end of the war between Russia and Ukraine.
The bank has expressed this in its Commodity Markets Outlook report for April this year released Friday.
According to the bank, the war in Ukraine has caused major supply disruptions and led to historically higher prices for a number of commodities and prices are expected to be significantly higher in 2022 than in 2021 and to remain high in the medium term.
It further says the price of Brent crude oil is projected to average $100 per billion barrels of petroleum liquid (BBL) in 2022, a 42 per cent increase from 2021 and its highest level since 2013 and that non-energy prices are expected to rise by about 20 percent in 2022, with the largest increases in commodities where Russia or Ukraine are key exporters.
World Bank believes that wheat prices are forecast to increase by more than 40 per cent this year, reaching an all-time high in nominal terms, adding that the outlook for commodity markets depends heavily on the duration of the war in Ukraine and the severity of disruptions to commodity flows.
“For policymakers, a short-term priority is to provide targeted support to poorer households facing higher food and energy prices.
“Over the longer term, they can encourage energy efficiency improvements, facilitate investment in new sources of zero-carbon energy and promote more efficient food production. Recently, however, policy responses have tended to favour trade restrictions, price controls and subsidies, which are likely to exacerbate shortages,” reads the report.
The outlook from the bank further reveals that energy prices (in US dollar terms) were more than four times higher in March 2022 than their April 2020 lows—the largest 23-month increase in energy prices since the 1973 oil price hike and fertiliser prices rose by 220 per cent between April 2020 and March 2022, their largest 23-month increase since 2008.
Economist Betchani Tchereni and agriculturalist Leonard Chimwaza share fears of World Bank indicating that no country will be spared from the effects of the war.
Tchereni said the best way for now to cushion the country from rising prices is the removal of middlemen in the supply chain.
“Products such as fertiliser have middlemen who purchase the products on behalf of Malawi; we need to remove such people from equation so that government on its own can negotiate with the suppliers. Apart from that, we should start looking at African countries who can supply us with what we need,” he said.
Chimwaza said the best solution to the problems which may face AIP is ordering the fertiliser in good time.
“Prices will continue rising and the later we order, the worst prices we will face; therefore, government