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The Global Food Shock Will Last Years, Not Months, Report Says

This report does not constitute a rating action.

LONDON (S&P Global Ratings) June 1, 2022--Rising food prices and diminishing supplies as a result of the Russia-Ukraine war will likely last through 2024, said S&P Global Ratings in a report published today on RatingsDirect "The Global Food Shock Will Last Years, Not Months".

Fertilizer shortages, export controls, disrupted global trade, and escalating fuel and transport costs will all exert upward pressure on the cost of staples.

"Our analysis shows low and low- to middle-income countries in Central Asia, the Middle East, Africa, and the Caucasus could be worst hit by the first-round impact," said S&P Global Ratings credit analyst Samuel Tilleray.

The report has examined which rated sovereigns are the largest cumulative importers, relative to their own GDP, of the key grain and seed-oil items most significantly affected by the conflict. The Caucasus nations Tajikistan, Uzbekistan, and Armenia look particularly exposed through their almost complete reliance on Russia for these key food commodities, should sanctions or self-sanctioning complicate trade. Similarly, the Arab states Morocco, Lebanon, Egypt, and Jordan each rely nontrivially on Ukraine for their food supply and are therefore susceptible to war-induced disruption to ports and processing activities.

"We believe the shock to food supply will have negative implications for emerging market countries, affecting GDP growth, fiscal performance, and social stability," said Mr. Tilleray.

The potential impact on sovereign credit ratings will depend, among other things, upon the extent and severity of the food shock, the ability of governments to minimize the social and economic costs, and international efforts to help the affected countries.

"Although many of the sovereigns most exposed to this risk already have very low credit ratings, the negative economic or political fallout of the food shock could contribute to rating downgrades," said Mr. Tilleray.

Ukraine and Russia, both or individually, rank among the top three global exporters of wheat, maize, rapeseed, sunflower 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 fertilizers globally in 2020.

The report is available to subscribers of RatingsDirect at If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box located in the left column at Alternatively, call one of the following S&P Global Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; or Stockholm (46) 8-440-5914

Primary Credit Analyst:Samuel Tilleray, London + 442071768255;
Secondary Contact:Frank Gill, Madrid + 34 91 788 7213;

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