Cheap energy can ease global inflation: Ayhan Kose, deputy chief economist at the World Bank

Ayhan Kose, deputy chief economist at the World Bank, told ET that if trade tensions ease in a lasting way, this means stronger prospects for commodity demand, which will strengthen global growth prospects.On the second day of the release of the World Bank’s latest report on commodity market outlook, predicting global commodity prices could fall to their lowest levels in the 2020s, Kose said the expected results for commodity prices are expected to be higher than the benchmark forecasts in the report.
The report said global commodity prices will fall 12% in 2025 and then fall 5% in 2026.
Among the large oil importers, lower commodity prices could be partly offset by headwinds caused by rising trade tensions, he said.

“Lower oil prices will enhance inflation-adjusted income in these economies (all others are the same) and tend to weigh price inflation for domestic consumers,” he said. He added that at a global level, energy prices are expected to contribute negatively to inflation this year, directly reducing global consumer price inflation by about 0.35 percentage points.

He said India is an important importer of crude oil. “The main factors driving lower oil prices during the forecast period are slowing global growth, and its adverse effects usually exceed the returns of oil importers with lower oil prices.” He said the main direction of causation is due to lower commodity prices, as commodity prices lower demand for commodities, as commodity prices lower demand for commodities, as commodities are lower demand for commodities. “Lower commodity prices will significantly curb exports and fiscal revenues, which may weaken economic activity,” he said.

Gold
He said gold prices in 2025 are expected to rise $3,250 at their 2025 high after a 23% increase in 2024 before eased slightly in 2026.

This will mark an annual growth of 10 consecutive years.

“The strong avoidance demand for gold is expected to continue in the short term and is subject to uncertainty, geopolitical tensions and concerns about volatility in major financial markets,” he said, noting that the central bank’s gold purchases are also expected to remain strong, reflecting their reserve management strategies and providing additional support for prices.