The threat to farms in eastern Ukraine and exports through Black Sea ports could reduce wheat supplies at a time when global food prices are at their highest level since 2011.
WASHINGTON -- Just what a vulnerable world economy didn't need - a conflict that accelerates inflation, rattles markets and portends trouble for everyone from European consumers to indebted Chinese developers and families in Africa that face soaring food prices.
Russia's attack could slow Europe's economic recovery by sending already elevated energy prices ever higher. Europe, an energy importer, receives close to 40% of its natural gas from Russia. A cutoff of that energy source could undercut the continent's economy. High natural gas prices have already led to higher home utility bills for both natural-gas heat and electricity generated from gas, crimping consumer spending.
"Escalating tensions put two cornerstones of this year's expected growth recovery - a rebound in consumer spending and a pickup in industrial activity - at further risk," Oliver Rakau and Mateusz Urban at Oxford Economics said in a research note. Ukraine is the world's fifth-largest wheat exporter, agricultural analyst Alex Smith wrote last month in the journal Foreign Policy, and many of the countries that rely on its wheat"already face food insecurity from ongoing political instability or outright violence.'' Yemen, for instance, imports 22% of its wheat consumption from Ukraine, Libya about 43%, Lebanon roughly half.
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