Impact of the COVID-19 Pandemic on the World Energy and Food Commodity Prices: Implications for Global Economic Growth

Abstract

The negative socio-economic consequences of the COVID-19 pandemic are widely discussed. However, relatively less attention is paid to its impact on the world commodity price formation including energy and food prices. The aim of this paper is to examine the impact of the COVID-19 pandemic on world energy commodity prices and their interactions with world food commodity prices. Using the World Bank data on commodity prices we look for evidence of changes in energy and food prices caused by occurrence of the COVID-19 pandemic, which was assumed to be a negative shock to the global economy in terms of both supply and demand. Based on data series analysis of indices of world energy and food commodity prices, it is evident that after the outbreak of the COVID-19 pandemic the energy prices, especially oil prices, plummeted. Food prices followed the same direction; however, their plunge was much less extreme. In general, it can be concluded that the pandemic caused a severe energy price shock which clearly had a negative impact on global economic growth, but the scale of this impact differs depending on the type of economic sector and countries’ net export positions in energy and food trade.

Keywords

• demand and supply shocks
• energy prices
• food prices
• economic growth