The International Monetary Fund (IMF) has projected the average oil prices just below $60 per barrel for 2019 and 2020 in its update World Economic Outlook (WEO). This is down from about $69 and $66, respectively, in the last WEO. Metals prices are expected to decrease 7.4 percent year-over-year in 2019, a deeper decline than anticipated last October, and to remain roughly unchanged in 2020. Price forecasts for most major agricultural commodities have been revised modestly downwards.
The Fund’s updated WEO, released on the sidelines of the World Economic Forum (WEF) in Davos yesterday, noted crude oil prices have been volatile since August, reflecting supply influences, including US policy on Iranian oil exports and, more recently, fears of softening global demand. As of early January, crude oil prices stood at around $55 a barrel, and markets expected prices to remain broadly at that level over the next 4–5 years.
Growth in the Middle East, North Africa, Afghanistan, and Pakistan region is expected to remain subdued at 2.4 percent in 2019 before recovering to about 3 percent in 2020. Multiple factors weigh on the region’s outlook, including weak oil output growth, which offsets an expected pickup in non-oil activity; tightening financing conditions ; US sanctions on Iran; and, across several economies, geopolitical tensions.
In sub-Saharan Africa, growth is expected to pick up from 2.9 percent in 2018 to 3.5 percent in 2019, and 3.6 percent in 2020. For both years the projection is 0.3 percentage point lower than last October’s projection, as softening oil prices have caused downward revisions for Angola and Nigeria. The headline numbers for the region mask significant variation in performance, with over one-third of sub-Saharan economies expected to grow above 5 percent in 2019–20.
The global growth in 2018 is estimated to be 3.7 percent, as it was last fall, but signs of a slowdown in the second half of 2018 have led to downward revisions for several economies.
“Weakness in the second half of 2018 will carry over to coming quarters, with global growth projected to decline to 3.5 percent in 2019 before picking up slightly to 3.6 percent in 2020, 0.2 percentage point and 0.1 percentage point lower, respectively, than in the previous WEO,” the document said.
