The conflict in the Middle East and its effects on fertilizer and hydrocarbon prices put millions more people at risk of food insecurity, warned World Bank Chief Economist Indermit Gill.
“There are already about 300 million people suffering from acute food insecurity” worldwide, Indermit Gill noted. And “this number will increase by about 20% very, very quickly,” the official warned on the sidelines of the Spring Meetings of the International Monetary Fund (IMF) and the World Bank in Washington.
The cause is the rise in oil prices, from which most fertilizers are derived. To reduce costs, farmers are decreasing fertilizer use, which lowers global grain production and could lead some countries to ban exports, driving food prices even higher. “These export bans concern us enormously,” Gill stated, noting that Iran announced a suspension of all food exports in the early days of the war.
If a ceasefire is not found quickly, “famine will begin to affect” the most vulnerable countries “head-on,” the World Bank economist assessed. While Asia is currently the continent most affected by high hydrocarbon prices, the crisis is expected to spread very quickly to Africa as it prolongs.
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Regarding food prices, there may be a lag. “The food products currently traded have already been grown,” Gill highlighted, with fears concentrating on future harvests. The combination of rising fuel and food prices will accelerate inflation, which could jump from 3% globally this year to 4.7% under the World Bank’s most pessimistic scenario, based on the conflict continuing until August.
If these price increases “take hold, particularly in products that the most disadvantaged consume most frequently,” such as energy and food, it will have “disastrous consequences,” the economist warned. Simultaneously, global growth could be cut by about 40% in 2026 if the war persists through the summer.
According to the World Bank official, higher inflation combined with lower growth would constitute a “hard double blow” to the debt sustainability of poor countries, further compromising their ability to face new crises.
