Global Food Crisis Threatens Morocco’s Stability, S&P Warns

Standard & Poor’s published on Wednesday, June 1, a rather worrying report entitled "The Global Food Shock Will Last Years, Not Months." "Low and lower-middle income countries in Central Asia, the Middle East, Africa and the Caucasus will be particularly affected by rising food prices and supply shortages in the wake of the war between Russia and Ukraine," the report notes, noting that the surge in food prices could weigh on the social stability of many countries around the world.

Given that many of these countries have limited capacity to replace imports with substitute products, Standard & Poor’s states that adjusting to price shocks would lead to a decline in food availability. Consequently, the risk of social unrest would increase, warns the rating agency. "We believe the food supply shock will have negative implications for poor and emerging countries, affecting GDP growth, fiscal performance and social stability," said Samuel Tilleray, credit analyst at S&P Global Ratings.

Arab states such as Morocco, Lebanon and Egypt are "sensitive to disruptions" due to their heavy dependence on Ukraine for their food supply, the report says. The rating agency also reveals that the global food shock could weigh on sovereign ratings and government bonds in several countries. "While many of the sovereign bonds most exposed to this risk already have very low credit ratings, the economic and political fallout from the food shock could contribute to rating downgrades," said Samuel Tilleray.