Post by Forum Moderator / Kaskasero on Jul 3, 2008 15:12:09 GMT 8
‘High oil, food prices hurt many’
By : Cai U. Ordinario | Business Mirror
3 July 2008 | 1:06 PM
The reality of unabated increases in oil and food prices is already being felt around the world and is placing extreme pressure on developing countries like the Philippines, as they face balance-of-payments problems, higher inflation and worsening poverty.
In the latest report of the International Monetary Fund (IMF) titled “Food and Fuel Prices—Recent Developments, Macroeconomic Impact and Policy Responses,” the fund said the food- and oil-price surge is hurting the poorest countries the most.
The IMF said the effect of high food and oil prices is expected to be “most acute” in import-dependent poor and middle-income countries like the Philippines, which is the world’s biggest importer of rice.
“In advanced countries, higher food and fuel prices are reducing people’s living standards and making it more difficult for governments and central banks to support growth while containing inflation. In emerging economies, and especially in some low-income countries, the stakes are even higher. For the very poor, high food prices can mean deep poverty, hunger and malnutrition,” the IMF said in a statement issued at the release of the study based on information and analysis by IMF economists working on 162 countries.
“Some countries really are at a tipping point,” IMF managing director Dominique Strauss-Kahn said.
The study showed that higher food prices have cost a group of 33 poor net food importers $2.3 billion, or 0.5 percent of 2007 annual gross domestic product (GDP), since January 2007.
In the same period, the effect of rising oil prices on 59 low-income net oil importers was $35.8 billion, or 2.2 percent of their GDP.
The study also said annual food- price inflation for 120 low-income and emerging-market countries increased to 12 percent at the end of March 2008 from 10 percent three months earlier.
Fuel prices, meanwhile, accelerated to 9 percent from 6.7 percent in March. “Preliminary data indicate the problem is worsening,” the IMF added.
The IMF said poor countries that are highly dependent on food imports are particularly vulnerable to rising food prices. The share of household spending on food in emerging and developing economies like the Philippines exceeds 50 percent.
The study found that low-income households are the most affected by food-price inflation and warned that the share of undernourished people in developing countries could rise rapidly above the current 40 percent of total population.
Meanwhile, though the IMF expects that food and oil prices will moderate from recent highs, more resources need to be mobilized to address supply problems.
The study said oil-futures markets suggest that oil-prices may gradually ease over the next five years. The IMF said, however, that this estimate is still uncertain and that efforts must still be focused on the downside risks to near- and medium-term global growth prospects and responses to sustained high prices.
In terms of food prices, the IMF cited projections that these will gradually ease in the short term, but a more substantial easing is expected in the medium term.
Better wheat harvests are expected this year until 2009, which has already caused a significant easing from recent peaks. However, the IMF expects high food prices to continue longer than usual.
As a response to these problems, the IMF said it stands ready to help with balance-of-payments support, and has already provided additional financial assistance to seven low-income countries through the concessional Poverty Reduction and Growth Facility.
The fund is also streamlining the Exogenous Shocks Facility to make it more useful to members. It is also ready to provide support for middle-income countries through standby arrangements.
“If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and, at the same time, maintain stability in their economies. They need good policy options and they need help from the international community.
“Their challenge is ours. It is to ensure adequate food supplies while preserving the poverty-reducing benefits derived in recent years from faster growth, low inflation and better budget and balance-of-payments positions,” Strauss-Kahn said.
By : Cai U. Ordinario | Business Mirror
3 July 2008 | 1:06 PM
The reality of unabated increases in oil and food prices is already being felt around the world and is placing extreme pressure on developing countries like the Philippines, as they face balance-of-payments problems, higher inflation and worsening poverty.
In the latest report of the International Monetary Fund (IMF) titled “Food and Fuel Prices—Recent Developments, Macroeconomic Impact and Policy Responses,” the fund said the food- and oil-price surge is hurting the poorest countries the most.
The IMF said the effect of high food and oil prices is expected to be “most acute” in import-dependent poor and middle-income countries like the Philippines, which is the world’s biggest importer of rice.
“In advanced countries, higher food and fuel prices are reducing people’s living standards and making it more difficult for governments and central banks to support growth while containing inflation. In emerging economies, and especially in some low-income countries, the stakes are even higher. For the very poor, high food prices can mean deep poverty, hunger and malnutrition,” the IMF said in a statement issued at the release of the study based on information and analysis by IMF economists working on 162 countries.
“Some countries really are at a tipping point,” IMF managing director Dominique Strauss-Kahn said.
The study showed that higher food prices have cost a group of 33 poor net food importers $2.3 billion, or 0.5 percent of 2007 annual gross domestic product (GDP), since January 2007.
In the same period, the effect of rising oil prices on 59 low-income net oil importers was $35.8 billion, or 2.2 percent of their GDP.
The study also said annual food- price inflation for 120 low-income and emerging-market countries increased to 12 percent at the end of March 2008 from 10 percent three months earlier.
Fuel prices, meanwhile, accelerated to 9 percent from 6.7 percent in March. “Preliminary data indicate the problem is worsening,” the IMF added.
The IMF said poor countries that are highly dependent on food imports are particularly vulnerable to rising food prices. The share of household spending on food in emerging and developing economies like the Philippines exceeds 50 percent.
The study found that low-income households are the most affected by food-price inflation and warned that the share of undernourished people in developing countries could rise rapidly above the current 40 percent of total population.
Meanwhile, though the IMF expects that food and oil prices will moderate from recent highs, more resources need to be mobilized to address supply problems.
The study said oil-futures markets suggest that oil-prices may gradually ease over the next five years. The IMF said, however, that this estimate is still uncertain and that efforts must still be focused on the downside risks to near- and medium-term global growth prospects and responses to sustained high prices.
In terms of food prices, the IMF cited projections that these will gradually ease in the short term, but a more substantial easing is expected in the medium term.
Better wheat harvests are expected this year until 2009, which has already caused a significant easing from recent peaks. However, the IMF expects high food prices to continue longer than usual.
As a response to these problems, the IMF said it stands ready to help with balance-of-payments support, and has already provided additional financial assistance to seven low-income countries through the concessional Poverty Reduction and Growth Facility.
The fund is also streamlining the Exogenous Shocks Facility to make it more useful to members. It is also ready to provide support for middle-income countries through standby arrangements.
“If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and, at the same time, maintain stability in their economies. They need good policy options and they need help from the international community.
“Their challenge is ours. It is to ensure adequate food supplies while preserving the poverty-reducing benefits derived in recent years from faster growth, low inflation and better budget and balance-of-payments positions,” Strauss-Kahn said.