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World faces worst food shock in more than a decade: IMF

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The world is now facing a food crisis at least as serious as the one experienced more than a decade ago, with food insecurity about to get worse, the International Monetary Fund warned, urging a decisive and coordinated approach.

Even though food prices have fallen in recent months, food insecurity is likely to worsen because of multiple factors including supply bottlenecks, challenges to Ukraine’s crops and high prices of fertilizers and energy, the IMF said in a report Thursday. This food crisis is at least equal to that seen in 2007-08, which spurred severe food shortages and many deaths, and led to social and political unrest, it said.

Fourty-eight countries have been identified as most affected by the crisis due to significant balance of payments pressures, acute food insecurity, and the Sahel region and other parts of sub-Saharan Africa facing the worst outlook. Apart from the scale of suffering, the costs to their economies are running in billions, the Washington-based organization said.

Economic costs of the food crisis for 48 most affected countries
A sudden change in global food and fertilizer prices will mean an extra cost to import bills this and next year will be almost $9 billion, according the IMF analysis
An extra $5 billion to $7 billion in budget outlays will be needed to protect vulnerable households
About $50 billion will be needed to eradicate acute food insecurity for 2022. In the longer term, chronic food insecurity and incidence of malnutrition will boost the cost significantly, the IMF said

“The combined effects of increased food and energy price and supply constraints not only lower living standards but are also likely to increase poverty and lower long-term growth, potentially fueling social unrest and large-scale migration,” according to the report’s authors who included Björn Rother, Sebastian Sosa, Lukas Kohler and Gaelle Pierre.

A highly uncertain outlook, declining food stockpiles and negative prospects for rice will also weigh on markets, they said. That’s on top of climate shocks, conflict and the Covid-19 pandemic which have led to rising food insecurity in the past five years.

The fund is currently considering the introduction of a so-called food-shock window. The new facility for countries affected by food crisis would be available for 12 months after approval. Managing Director Kristalina Georgieva said last week there was “no doubt” the IMF’s board would soon approve it.

© 2022 Bloomberg L.P.

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