In December, we lowered our commodity price forecast in order to reflect TD Economics’ more pessimistic global economic outlook. This edition of the Quarterly Commodity Report comes with a sense of déjà vu, as the ongoing deterioration of the global economy has led us to once again reduce our forecasts.

Indeed, with economic weakness becoming more pronounced across the globe, we have downgraded our world real GDP forecast to a contraction of 1.6% in 2009, compared to a 0.5% gain projected in December. This would mark the first contraction on post-war record. What’s more, with several uncertainties still surrounding the global financial system, the recovery will likely be later than originally thought, and much shallower. We now project the economy to bottom in the third quarter of the year (previously the second quarter), and to grow by only 2.2% in 2010, a full percentage point below our December call.

Hence, economic activity will remain in recessionary territory

of below 3.0% throughout the forecast period. In contrast, most forecasters are still betting on a global rebound of 3% or more next year.