By Alessandro Albano
Investing.com - Rising food prices and supply shortages as a result of the Russia-Ukraine war will "likely last until 2024 and possibly beyond", S&P Global Ratings wrote in a report published on Wednesday, stating that "fertiliser shortages, export controls, trade disruptions and rising fuel costs will put upward pressure on the cost of commodities".
"Low and lower-middle-income countries in Central Asia, the Middle East, Africa, and the Caucasus will be particularly hard hit," said Samuel Tilleray, credit analyst at S&P Global Ratings.
The research examines which countries are the largest importers, relative to their GDP, of the main grain products. Most affected by the conflict are the Caucasus nations. Tajikistan, Uzbekistan, and Armenia seem 'particularly exposed' due to their almost total dependence on Russia for these products. Similarly, the rating agency explains, that Arab states such as Morocco, Lebanon, Egypt, and Jordan depend on Ukraine for their food supplies and are therefore "susceptible to war-induced disruptions to ports and processing activities".
"We believe that the food supply shock will have negative implications for emerging market countries, affecting GDP growth, fiscal performance, and social stability," Tilleray stressed, pointing out that "although many of the government bonds most exposed to this risk already have very low credit ratings, the economic and political fallout from the food crisis could contribute to ratings downgrades".
Ukraine and Russia, both or individually, are among the world's top three exporters of wheat, maize, seeds, and sunflower oil. Together, they account for 12% of all food calories traded. Russia and Belarus were the first and sixth largest exporters of fertilisers globally in 2020, S&P recalls in the study.