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World Bank: Commodity prices likely to rise further in 2018

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Oil prices are forecast to rise to $56 a barrel in 2018 from $53 this year as a result of steadily growing demand, agreed production cuts among oil exporters and stabilizing U.S. shale oil production, while the surge in metals prices is expected to level off next year, the World Bank said on Thursday.

Prices for energy commodities – which include oil, natural gas, and coal — are forecast to climb 4 percent in 2018 after a 28 percent leap this year, the World Bank said in its October Commodity Markets Outlook. The metals index is expected to stabilize in the coming year, after a 22 percent jump this year as a correction in iron ore prices is offset by increased prices in other base metals. Prices for agricultural commodities, including food commodities and raw materials, are anticipated to recede modestly in 2017 and edge up next year.

“Energy prices are recovering in response to steady demand and falling stocks, but much depends on whether oil producers seek to extend production cuts,” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook. “Developments in China will play an important role in the price trajectory for metals.”

The oil price forecast is a small downward revision from the April outlook and is subject to risks. Supplies from producers such as Libya, Nigeria, and Venezuela could be volatile. Members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers could agree to cut production further, maintaining upward pressure on prices.

However, failure to renew the agreement could drive prices down, as could increased production from the U.S. shale oil industry. Natural gas prices are expected to rise 3 percent in 2018, while coal prices are seen retreating following a climb of nearly 30 percent in 2017. China’s environmental policies are anticipated to be a key factor determining future trends in coal markets.

Iron ore prices are forecast to tumble 10 percent in the coming year but tight supply should push up prices for base metals including lead, nickel and zinc.  Downside risks to the forecast include slower-than-anticipated demand from China, or an easing of production restrictions on China’s heavy industries.

Gold prices are anticipated to ease next year on expectations of higher U.S. interest rates.

Agriculture prices are expected to edge up in 2018 due to reduced supplies, with grain and oils and meals prices rising marginally. Agricultural commodities markets are well-supplied and the stocks-to-use ratios (a measure of how well supplied markets are) of some grains are forecast to be at multi-year highs.

However, favorable weather patterns, well-supplied global food markets, and relatively low world prices do not necessarily imply ample food availability everywhere. Drought conditions that are by some accounts the worst in 60 years, have caused crops failures in parts of Ethiopia, Somalia and Kenya and led to severe food shortages. Conflicts in South Sudan, Yemen and Nigeria have driven millions of people from their homes and left millions more in need of emergency food.

The World Bank’s Commodity Markets Outlook provides detailed market analysis for major commodity groups, including energy, metals, agriculture, precious metals, and fertilizers. The report includes price forecasts to 2030 for more than 45 commodities. It also provides historical price data and supply, demand, and trade balances for most commodities.

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Landmark Agreement Unites Parties in Boosting Commercial Space Operations in California

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Leaders from the State of California, REACH, the 30th Space Wing, Cal Poly State University and Deloitte today announced a commitment to develop a thriving spaceport at Vandenberg Air Force Base and the surrounding area. According to the memorandum of understanding, the parties will develop a master plan that identifies the required infrastructure, human capital development, governance and financing necessary to support the United States Space Force mission and position California as a global leader in the future of the commercial space industry.

Chris Dombrowski, Acting Director of GO-Biz, said: “California has been at the forefront of the aerospace industry for more than a century. This MOU cements that leadership and serves as a critical investment in California’s innovative economy as we work to safely recover from the COVID-19 induced recession. This cross-sector partnership will bring quality jobs to the central part of our state with Vandenberg Air Force Base serving as a thriving spaceport and the nation once again watching California.”

The memorandum is a key part of a larger strategy for economic development in the Central Coast region, built in collaboration with the governor’s Regions Rise Together initiative, REACH and Deloitte.

“This is a once-in-a-generation opportunity for the State of California to drive the space industry into the next century,” said Josh Nisbet, a managing director at Deloitte Consulting LLP, who leads its work for the state. “The foresight of leaders in California and in our national security agencies has put the Central Coast and Vandenberg Air Force Base in position to become a world-class spaceport and center of excellence in a quickly evolving market. Deloitte is thrilled to be supporting this journey.”

The U.S. government, in its first National Space Strategy, identifies the space industry as a top priority and highlights dynamic partnerships between government and commercial partners as essential to our economic prosperity, national security and scientific knowledge.

Col. Anthony Mastalir, 30th Space Wing Commander at Vandenberg Air Force Base, said: “Space is critical to national security, and the National Defense Strategy provides a very clear direction to restore our competitive edge in the re-emerging power competition to maintain space superiority. We rely on robust collaboration with our industry partners not only to provide assured access to space but also to maximize our range capacity and move forward into the range of the future.”

The region boasts several attributes that make it an ideal location for commercial space operations, a sector that is likely to lead high-quality job growth over the coming decades. Vandenberg already maintains active launch capabilities and favorable geography, and Cal Poly produces world-class engineering and science talent.

“The potential for the commercial space industry to provide significant jobs and economic impact to not only the Central Coast, but the entire state of California, make it worth pursuing aggressively. Through diverse partnerships and collaboration, we will ensure the Central Coast of California is the launchpad for the next frontier of commercial space,” said Melissa James, CEO of REACH.

The commercial space activities centered on the base could support a larger industry, and parties envision a robust cluster of space-related activities taking root in the region, with sustained presence of companies across the ecosystem from manufacturing and launch to maintenance and support and enabling human spaceflight for the first time in California.

Cal Poly President Jeffrey D. Armstrong said: “With its strong tradition of Learn by Doing, Cal Poly is pleased to work with other institutions in the region to play an instrumental role not only in developing the workforce of the future but also in spurring innovation and teaming with industry to foster growth and reach new milestones. We’re excited to play a key role in supporting the possibilities this landmark agreement holds.”

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Niger: World Bank Approves $250 Million to Boost Long-Term Growth

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The World Bank Board of Directors today approved a total amount of $250 million in International Development Association (IDA) credit and grant to help Niger develop its human capital and to mitigate the impact of the COVID-19.  

The Second Laying the Foundation for Inclusive Development Policy Financing (DPF) is the last operation in a programmatic series aimed at reducing gender gaps and providing cash transfers to households that are mostly affected by COVID-19. The program will also help expand access to electricity and potable water, improve debt management and transparency, and reduce fiscal risks. 

“The new program will help the Government pursue the reforms started to create enabling conditions for sustained and accelerated medium-term growth and tackle key structural challenges related to stark gender inequality and low access to key infrastructure,” said Joelle Dehasse, World Bank Country Manager for Niger. “This operation has been adjusted to reinforce actions that complement the government’s efforts to mitigate the impact of the CODIV-19 pandemic.”

In 2019, Niger’s economic performance remained robust, driven by strong performance in the primary and tertiary sectors. Real GDP growth was 5.8 percent, with 1.9 percent per capita growth. However, since March 2020, the COVID-19 pandemic is straining the country’s economy, mainly due to increased spending on health and social assistance services for vulnerable households. The pandemic’s adverse impact on regional and international trade, and on foreign direct investments is also severely affecting the country’s economic and social development.

“The adoption of reforms through this DPF series will help improve the livelihoods of communities in these times of COVID-19 pandemic,” said Luc Razafimandimby World Bank’s Senior Economist and co-Task Team Leader for the project. “Beyond the much-needed quick fixes, the DPF maintains its core structure to protect the future, which will also sow the seeds of post COVID-19 recovery through mutually reinforcing measures.”  

The operation is a result of an extensive consultation process involving government officials, development partners, civil society, and other key partners. It is fully aligned with the Government’s strategy through the National Economic and Social Development Plan (2017-2021) and also with the World Bank Country Partnership for Niger (CPF 2018-2022).

* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.6 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $21 billion over the last three years, with about 61 percent going to Africa.

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World Bank releases first comprehensive stock-taking of infrastructure services in Asia

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A new World Bank report presents data about infrastructure provision in three key sectors is Asia: road transport, electricity, and water and sanitation. As the first comprehensive, regional stock-taking of levels of supply, quality, and affordability of infrastructure services, Infrastructure in Asia underscores the need to better understand current levels of service delivery to facilitate governments’ infrastructure planning and financing. Well thought-out investment planning helps raise economic growth rates, increases competitiveness, offers new economic opportunities, and bolsters improvements in human capital.

Building a more extensive body of knowledge about the health of infrastructure provision worldwide is a priority for the World Bank. Infrastructure in Asia is the first step of a new research effort that will expand to other regions. The report is organized to provide regional overviews by sector, followed by country snapshots.

Over the past few decades, a large part of Asia (both East Asia and South Asia) has enjoyed strong economic growth and steady social development. Nevertheless, the region faces significant constraints in infrastructure investment. This is exacerbated by Covid-19 pandemic and the short-term challenges of a slowing global economy, higher borrowing costs, and geopolitical tensions. Longer-term, the region is highly susceptible to the effects of climate change, so infrastructure development must be sustainable and climate resilient.

Imad Fakhoury, Global Director for Infrastructure Finance, PPPs & Guarantees at the World Bank, underscored two crucial points in this context, “We must focus on smarter investments. This doesn’t necessarily mean spending more money, but harnessing technology, Infratech, and building efficiencies based on data so we can do more with less.”

He continued, “We also need better ‘infrastructure governance’—including strengthening policies, insitutions and investments, better planning, robust project preparation, investment prioritization, screening to decide whether to procure a project publicly or with private-sector support, and strong attention to resilience, quality, transparency and fiscal sustainability. This is crucial for accerating move towards resilient recovery stage as part of COVID-19 crisis response and rebuilding better.”

When it comes to building infrastructure that truly delivers economic and social impact, quality is as important as coverage. Governments worldwide and their development partners increasingly recognize the importance of resilience and quality in infrastructure service delivery. Infrastructure in Asia goes beyond appraising coverage levels to provide a set of key indicators that serve as proxies of multiple dimensions of infrastructure quality.

In addition to looking at the quality dimensions of infrastructure, the report’s signature contribution is its compliation of extensive and disparate information and data—otherwise time-intensive to gather and compare across sectors and countries—into a single volume.

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