The World Bank has projected that commodity prices could drop by 10% between 2024 and 2026 amid rising levels of extreme poverty and debt burden globally, particularly amongst developing economies.
The bank cautions that this decrease is unlikely to provide substantial relief for developing countries, where food-price inflation remains alarmingly high.
In its latest annual report tagged, “2024 Key Development Challenges in Nine Charts,” which presents a compelling picture of the global economy’s state, focusing on the uneven recovery from years of economic upheaval and its impact on poverty reduction efforts, the bank noted that this decline is primarily driven by an expected oil surplus, with oil prices forecasted to fall 5.1% in 2025 and 1.7% in 2026 after a 3.4% decline in 2024.
The report noted that while the global economy has stabilized and avoided a recession in 2024, the recovery has been uneven, with developed economies rebounding faster than developing nations.
‘However, the recovery has not been universal, with developed economies demonstrating a faster rebound while many developing nations continue to grapple with significant setbacks. Low-income countries, in particular, remain at risk of being left further behind, underscoring deep-seated disparities in global progress. A stark reality confronts the international community: the goal of eradicating extreme poverty by 2030 is increasingly unattainable”, It explained.
Furthermore, the World Bank estimated that approximately 700 million people—equivalent to 8.5% of the global population—are surviving on less than $2.15 per day, a figure that underscores the enduring prevalence of extreme poverty.
It added that by the end of 2023, the external debt of low- and middle-income nations reached an all-time high of $8.8 trillion, representing an 8% increase since 2020 as the rising global interest rates have made it increasingly difficult for many of these countries to stabilise their finances.
The World Bank has sought to address this escalating debt crisis by assessing the sustainability of debt levels in developing nations and enhancing their debt transparency and management capabilities. Notably, since 2022, the Bank and other multilateral institutions have invested an additional $51 billion in International Development Association (IDA)-eligible economies, exceeding the amounts they received in debt-service payments.
Reacting to the bank’s outlook, analysts at Cowry Research, said that the combination of elevated debt levels, persistent inflation, and limited fiscal space leaves these nations in a precarious position, struggling to balance short-term economic needs with long-term development goals.
“Despite these challenges, the World Bank remains optimistic about the potential for collective action to reignite progress toward eradicating extreme poverty and boosting shared prosperity.
The report calls for a renewed focus on promoting green, inclusive, and sustainable economic growth as a means of addressing the intertwined global challenges. It stresses the importance of creating opportunities for marginalised groups, particularly women and youth, as well as prioritising investments in climate mitigation and adaptation to ensure a livable planet.
Additionally, the Bank highlights the necessity of revitalizing international cooperation and financing mechanisms to support sustainable development,” they said.
SOURCE: THE SUN
