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Based on current projections, energy prices are expected to rise by 50 percent in 2022, reflecting an 81 percent increase in coal prices, a 74 percent rise in natural gas prices (average of the European, Japan, and U.S. benchmarks), and a 42 percent increase in the price of oil, Trend reports with reference to the World Bank’s Global Economic Prospects.
The report reveals that relative to January projections, the prices of energy commodities are now expected to be 46 percent higher on average in 2023.
WB analysts noted that supply disruptions of key energy commodities could severely affect a wide range of industries, including food, construction, petrochemicals, transport, and firm-level effects.
“Concerns about energy security have already prompted public policies aimed at bolstering national self-sufficiency and reducing energy prices for consumers; however, lessons from previous energy price shocks show that these policies are often costly and ineffective, compared with steps to encourage consumers to reduce demand, to substitute for other forms of energy, and to develop alternative energy sources. The increase in energy prices is likely to weigh on global economic activity. Higher energy prices will reduce activity in energy-importing economies by lowering real incomes, raising production costs, tightening financial conditions, and constraining macroeconomic policy. Stronger activity in some energy-exporting emerging market and developing economies—supported by more favorable terms of trade, expanded production, and stronger investment—will only provide a partial offset to the drag on global growth,” the report reads.
