Around the Mediterranean, raw materials prices should settle down

After the last report from the World Bank, raw material should level off. Alongside the South Mediterranean area, countries will be affected in many ways and at different levels. What should be the economic consequences for the Mediterranean area?

After the year 2017 where the price of raw material and products from agriculture registered increases, the 2018 year must level them off.

Oil and Gas prices should reach 56$ a barrel. A good news for Algeria for example with 95% of the export dedicated on hydrocarbon. Then the trade balance of the country must come back as it was in 2010. However, the logic is only working if the OPEC (Organization of the Petroleum Exporting Countries) pays respect to the price restriction. The report is taking into account the American shale gas production and the oil market demand into the whole analysis.

Globally the energetic products prices should increase to 4% in 2018 as well as the natural gas price up to 3%. After the World Bank, Charcoal should decrease to 30% which has not many consequences around the Mediterranean.

However, the agriculture products should register a significant decrease. Countries as Morocco, Tunisia, Egypt or Lebanon will probably suffer from the worldwide deterioration. Morocco, for example, has registered this year a good export balance thanks to the fruits and vegetables sent to the European Union. Agriculture represents the 1st sector contributing the national GDP (Gross Domestic Product) of Morocco for example.

Wheat and vegetable oil, especially those concerning Egypt and Tunisia, should reservedly level off. Both countries should at that stage change their respective policy on Agriculture to balance their trade deficit. Indeed Egypt whose already having problems to import enough wheat to feed the population cannot afford to pay more for the same product. On the reverse, Tunisia whose the 2nd olive oil producer around the world cannot imagine selling the same product for cheaper.

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