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Credit: Adobe Stock and IMF

Geoeconomic Fragmentation Threatens Food Security and Clean Energy Transition

Providing corridors for food staples and critical minerals could avert food crises and help keep the green transition on track.

Russia’s invasion of Ukraine in 2022 fragmented major commodity markets. Countries have since restricted trade in commodities, with a more than twofold increase in new policy measures relative to 2021.

Commodities, particularly minerals critical for the green transition and some highly traded agricultural goods, are especially vulnerable in the event of more severe geoeconomic fragmentation, as we show in a chapter of our latest World Economic Outlook.

Further fragmentation could lead to turmoil in commodity markets, causing large price swings. While long-term global economic losses of about 0.3 percent would remain relatively modest due to offsetting effects in net producing and consuming countries, low-income and other vulnerable countries would bear the brunt. In our illustrative simulations, they could face long-term gross domestic product losses of 1.2. percent on average, largely stemming from disruptions in agricultural imports.

For some countries, losses could exceed 2 percent. This would exacerbate food security concerns, as low-income countries are particularly reliant on food imports to feed their population. 

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