Russia’s invasion of Ukraine exposed the country’s dependence on food imports. Vietnam, the country’s top supplier of rice, has also shown a decline in production.
Russia’s invasion of Ukraine, a humanitarian disaster that has killed thousands and displaced millions of people, has shocked the global economy as countries were still reeling from the pandemic.
Its impact was swift. Oil prices rose, pushing the price of commodities that need to be transported, which is everything from food to raw materials and ingredients used in food.
The crisis underscored food insecurity in many countries including the Philippines, said Zachary Abuza, Southeast Asia analyst at the US National War College.
The next president will have to address rising food prices on top of the economic challenges.
“Food prices are already high. They’ve been high for the past couple of years due to the pandemic and changes in global shipping and supply chains,” Abuza said.
“This is going to really slow down economic recoveries everywhere. After two years of really slow economic growth if not contraction in several countries, energy prices are going to soar,” he said.
Russia is the world's largest exporter of oil to global markets and the second largest crude oil exporter behind Saudi Arabia. Russia and the Ukraine also account for about 20% of global wheat production, which is the main ingredient for bakery products.
Even if the Philippines does not get much in the way of direct imports from Russia, sanctions against Russia have affected global supply, pushing prices up.
The extent of harm it will cause the world economy and the Philippines remains unknown, and so is how long the conflict will last. Abuza feared “it will get worse before it will get better.”
Nomura Global Markets Research downgraded its growth forecast for the country to 6.3% from 6.8% this year. The research firm projected consumer spending to dampen due to inflation that it said could reach 4.6% in 2022.
If tensions don't ease soon, the Department of Energy projects the price of gasoline per liter to reach P86.72 from less than P60 in early February or before the Ukraine crisis.
Abuza also flagged a future problem with the country’s rice supply because of factors such as sea level rise and the salinization of the Mekong Delta in Vietnam due to the Chinese damming of the Mekong River.
“This matters because Vietnam is the third largest exporter of rice in the world and a key one for the Philippines. The Philippines cannot feed itself and it’s really never been able to feed itself. It’s largely dependent on rice imports,” said Abuza.
“For Indonesia and the Philippines which have growing populations, and both rely on imports, food prices are going to go up so everything from your bread to your rice, to your pastas, all that food stuff’s gonna go up. Cooking oils, whether sunflower seed or vegetable oils, will go up,” he said.