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An Overview Of Global Commodity Price Changes And Their Implications For The Economy

Global commodity prices were affected by two significant adverse events during the past two years. The first event was the COVID 19 pandemic. The worry about the health consequences of the new virus led to worldwide lockdowns and strict health policy measures that disturbed the fragile global market balance, causing supply and demand shocks. The second event was the more recent Russian invasion of Ukraine. The invasion had a more profound effect on prices of energy and agricultural products. Both events caused significant market volatility and prompted a strong policy response from fiscal and monetary authorities. The aim of this paper is to analyze how the prices of key commodities changed in the period of the past five years, with a special emphasis on the period between March 2020 and September 2022. The analysis will focus on the way in which market instability and price surges were affected by external shocks. Through the analysis, the paper will answer the question what the key determinants of commodity price change are, how do these changes affect the global economy and which policies can countries implement to minimize the adverse effects of recent market shocks.

commodity markets, COVID 19 pandemic, Russian invasion of Ukraine, global economy

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