Developing countries were strengthening, and attracting investment, after the global pandemic and the Ukraine war sent food, fuel and financial markets into turmoil. Now the Iran conflict threatens to unravel those gains and leave households struggling to feed families.
“This could have a big impact on prices, food prices, over time,” said Odile Renaud-Basso, President of the European Bank for Reconstruction and Development, a core lender across some 40 emerging economies. Food and fuel make up less than a quarter of the consumer inflation basket in most developed economies, but account for 30% to 50% in many emerging markets, said Marie Diron, managing director with Moody’s Ratings.
“This exposure leaves many economies particularly vulnerable to externally driven price volatility,” Diron said. Food makes up a sizeable share of consumption in emerging economies
FERTILISER SQUEEZE HIKES PRICES
A major pressure point is fertiliser. The Strait of Hormuz, effectively blocked by Tehran, carries some 30% of globally traded fertilisers and Gulf producers are big suppliers of ammonia and urea, according to the United Nations Food and Agriculture Organisation. Bank of America warns that the conflict threatens 65% to 70% of global supplies of urea, and prices are already up 30% to 40%. A line chart with the title ‘Fertiliser prices’
“This will affect planting…there will be a lower supply of commodities in the world of staple cereals, of feed, and therefore of dairy and meat,” Maximo Torero, Chief Economist with the Food and Agriculture Organisation said of the impact if the conflict lasts even just a few more weeks.
–Reuters–
