Subscribe
Despite signs of a gradual recovery in commercial shipping through the Strait of Hormuz, developing countries are likely to continue facing the consequences of higher food and fuel costs for months to come, according to a new report released by the United Nations Conference on Trade and Development (UNCTAD).
During the more than 100 days of shipping disruption, negative effects had already rippled through the global economy, the UN agency’s report said.
The report, Strait of Hormuz Disruptions- Beyond reopening: Lasting impacts on vulnerable economies, warned that freight contracts, supply chains and food systems would take longer to adjust and that high food costs could contribute to acute malnutrition in developing countries.
UNCTAD warned that higher energy prices triggered by disruptions in the strait have far-reaching consequences beyond fuel markets. Increased oil prices raise transportation costs, adding to inflationary pressures and slowing economic growth worldwide. At the same time, rising fertiliser and fuel costs have increased agricultural production expenses, threatening crop yields and pushing domestic food prices even higher.
The countries most vulnerable to these shocks are those that rely heavily on imports of oil and staple food commodities.
The UN agency highlighted that developing countries, particularly small island developing states (SIDS), are among the hardest hit because they depend heavily on imports of both fuel and food.
Small island countries like Cabo Verde and Micronesia depend heavily on food and oil imports, which creates a dual exposure to shocks, making them especially vulnerable to price increases, UNCTAD said.
Meanwhile, countries that import staple food such as Yemen remain very vulnerable because their fragile economies are not ready to absorb rising grain prices and transportation costs.
The UN agency identified 61 vulnerable economies, including 35 least developed countries (LDC), exposed to oil and cereal import shocks linked to the Strait of Hormuz disruption.
Beyond the economic implications, UNCTAD warned that prolonged food inflation poses a serious threat to food security and child nutrition.
Rising food prices increase the risk of child wasting — a form of acute malnutrition characterised by low weight for height — which is strongly associated with higher rates of illness and early childhood mortality.
According to the report, a five per cent increase in real food prices raises the risk of child wasting by 15 per cent among poor children and by 26 per cent among children in rural landless poor households.
UNCTAD called for stronger international cooperation to help vulnerable countries manage higher import costs, cushion food and fuel price shocks and build more resilient trade and food systems capable of withstanding future disruptions.
