IMF Forecasts Rising Commodity Prices in 2010
Saturday, 02 January 2010

Global commodity prices, including those of food and oil, are likely to increase in the year ahead after a sharp decline at the start of 2009, the IMF said this week.

The report, an Outlook for 2010 on commodity prices, projects rising global demand leading to higher prices.

The rising demand is expected to coincide with a faster expansion of global commerce as there is stronger perception that the worst recession is over aided by worldwide stimulus packages.

"Commodity prices were surprisingly buoyant in 2009, and are expected to increase further in 2010 as world activity expands after the global crisis," observes the report.

It says that emerging and developing economies would lead the price rise with their industrialisation.

The report points out that after a global peak of commodity prices around the middle of 2008, when food price index also reached its high, commodities witnessed a sharp decline around February 2009.

But the lending agency's report projected that prices would retain their current trend and continue to rise well into the next year. This was apparently contrary to what had been witnessed previously.

"After previous global industrial downturns, prices typically continued to fall or rose at very modest rates, far below the increases recorded this year."

The IMF's commodity price index, according to the report, rose by over 40 percent in the 8 months since global industrial production reached a trough in February 2009.

But after similar downturns, the index rose by only five percent on average over 8 months after a slump.

But the recent recession had also caused a sharper decline in comparison to the previous ones, said the report.

The rising prices, however, were unlikely to cause another price spike in the near term according to the report.


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