Ukraine  conflict may cause food crisis in Latin America – IDB

The Inter-American Development Bank (IDB) published a report this July, in which it warns that the conflict in Ukraine may slow down growth and cause a food security crisis in some countries in the region.

The publication specifies that although the direct impact on trade is expected to be limited, the indirect consequences are likely to be very relevant, although different, depending on each country.

In the short term, the main transmission channels of this disruption are the rise in the price of food and energy, the contraction of world growth, the increase in inflation, and the possible contagion effect in the financial markets, emphasized the organization’s publication.

The IDB refers to the initial estimates of the Organization for Economic Co-operation and Development (OECD), in which it was indicated that the cost of the war could reduce world growth by one percentage point, add 2.5 percentage points to global inflation. and add 1.5 percentage points more to interest rates for emerging markets.

It also mentions the downward revisions made in April by the International Monetary Fund (IMF), which forecasts that world GDP growth in 2022 will be 3.6%, and that of Latin America and the Caribbean 2.5%, that is, less than the respective growth rates of 4.9% and 3% forecast in November 2021.

The IDB says that this is not good news for Latin America, with limited internal markets plagued by difficulties.

This will imply that the region will need to import growth from the rest of the world through international trade. But the slowdown in the world economy means there will be fewer exports and less foreign exchange.