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Business and Economics > Industries: Food

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Cover IMF Working Papers
Hanging Out to Dry? Long-term Macroeconomic Effects of Drought in Fragile and Conflict-Affected States
Kalin I Tintchev
and
Laura Jaramillo
Using a comprehensive drought measure and a panel autoregressive distributed lag model, the paper finds that worsening drought conditions can result in long-term scarring of real GDP per capita growth and affect long-term price stability in Fragile and Conflict-Affected States (FCS), more so than in other countries, leaving them further behind. Lower crop productivity and slower investment are key channels through which drought impacts economic growth in FCS. In a high emissions scenario, drought conditions will cut 0.4 percentage points of FCS’ growth of real GDP per capita every year over the next 40 years and increase average inflation by 2 percentage points. Drought will also increase hunger in FCS, from alreay high levels. The confluence of lower food production and higher prices in a high emissions scenario would push 50 million more people in FCS into hunger. The macroeconomic effects of drought in FCS countries are amplified by their low copying capacity due to high public debt, low social spending, insufficient trade openness, high water insecurity, and weak governance.
Keywords:
climate change; long-term growth and inflation; climate policy; drought condition; FCS country; FCS group specification; drought measure; FCS' growth; Natural disasters; Food production; Productivity; Global; Sub-Saharan Africa
Cover IMF Notes
Global Food Crisis Update: Recent Developments, Outlook, and IMF Engagement
Mr. Bjoern Rother
,
Mr. Sebastian Sosa
,
Majdi Debbich
,
Chiara Castrovillari
, and
Ervin Prifti
The global food crisis remains a major challenge. Food insecurity fueled by widely experienced increases in the cost of living has become a growing concern especially in low-income countries, even if price pressures on global food markets have softened somewhat since the onset of Russia’s war in Ukraine in February 2022. Targeted assistance to the most vulnerable households combined with policy measures to support trade and agriculture systems, including to better cope with climate shocks, can help countries withstand the fallout of the ongoing food crisis while building longer-term resilience. The IMF, working in close cooperation with other international organizations, has continued to contribute to international efforts to alleviate food insecurity by providing policy advice, capacity development, and financial support through Upper Credit Tranche Arrangements and the new Food Shock Window. New commitments to countries particularly affected by the global food crisis total $13.2 billion since February 2022, of which $3.7 billion has been disbursed as of March 2023.
Keywords:
Food insecurity; Russia’s war in Ukraine; global inflation; terms of trade shock; international cooperation; open trade; vulnerable households; agricultural production; IMF lending; IMF policy advice; capacity development