RIYADH: Global buyers of commodities are expected to pay $5.2 trillion more to producers in 2022 compared to 2019 as surging prices further dent the sector, Bloomberg reported citing a new base case analysis from Citigroup Inc.
The analysis pegs this rise as equivalent to 5 percent of the world’s gross domestic product.
The report warns that if the price rise trend continues in the second half of this year, buyers would be paying $6.3 trillion more than what they paid during 2019, or 6.2 percent of GDP.
Citigroup analysts wrote in the report that such a global commodity shock would be on the scale of what the world experienced during the early 1970s oil crisis.
“The longer the commodity shock persists, the bigger the negative impact on commodity consumers and on the net, global growth and equities,” wrote the analysts.
Analysts also added that Europe and some emerging economies could be most vulnerable to a growth hit if the shock continues.
The report further noted that a higher-for-longer scenario will accelerate the risk of recession in Europe, and added that the commodity-driven inflation is already cutting European households’ real disposable incomes by 2 percent annually.
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