17:55 - 13.06.2022

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June 13, Fineko/abc.az. Global buyers of commodities are on track to pay producers $5.2 trillion more in 2022 than they did in 2019 thanks to surging prices, according to a new base case analysis from Citigroup Inc.

ABC.AZ reports that this increase is the equivalent of 5% of world GDP, the analysts wrote in a Monday note. In a scenario where forward prices for the 2nd half of this year materialize, buyers would be paying $6.3 trillion more than during 2019, or 6.2% of GDP.

In either case, such a shock would be on the scale of what the world experienced during the early 1970s oil crisis, when taken as a share of global GDP, the analysis found.

“The longer the commodity shock persists, the bigger the negative impact on commodity consumers and on net, global growth and equities,” the analysts wrote.

A higher-for-longer scenario would fuel the risk of a recession in Europe and hurt European production competitiveness, the Citi analysts wrote.