Commodity prices in many markets hit bottom in 2016, and 2017 should be a year of recovery. However, the year will not see a return to the highs of the commodities supercycles. Those were the findings of the latest Commodity Price Outlook published by the World Bank. Latin Trade spoke with John Baffes, a Senior Economist with the World Bank’s Development Prospects Group and the manager of the report, on price trends for the most important commodities for the Latin American market this year.
Baffes believes oil prices will continue their 2016 rising trend, when they increased by over 10 percent in the fourth quarter. Since the July report, the World Bank has lifted its forecast for an average 2017 oil price of $53/barrel to $55/barrel. This will be 26 percent higher than the lows seen in 2016. “We believe the agreement between OPEC and non-OPEC producers to cut production will hold long enough to lift prices beyond their fourth quarter highs,” said Baffes. This will be good news for struggling oil exporters, particularly countries like Venezuela or Ecuador who rely on oil exports for government and export revenue. However, it will spell bad news for oil importers in the Southern Cone and the Caribbean, resulting in higher prices at the pump.
Metal prices are also expected to rise in the year, albeit more modestly, with the World Bank forecasting growth of 11 percent this year, the first growth in metal prices in six years. “The rise in metal prices is a China story,” says …
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