In the world’s advanced markets, the economic effects of runaway inflation are becoming increasingly evident. But in certain emerging economies, the risk of civil unrest increases with high food and energy costs, says Moody’s Investors Service.
In a new report, the rating agency said a combined food and energy price shock, amid the ongoing effects of the pandemic, raises the risk of social unrest in parts of the Middle East and Africa.
“Over the next 18 months, we expect higher social and political risks due to the sustained global food and energy price shock,” said Aurelien Mali, vice-president and senior credit officer with Moody’s, in a release.
Specifically, the report suggested that Lebanon and Jordan in the Middle East, and Mozambique, Togo, Tunisia and Namibia in Africa “are among the most susceptible to political unrest, given their high import dependency on oil and food, low incomes and already elevated social risks.”
Moody’s said the food and energy price shock will contribute to “significant global macroeconomic volatility,” and in some cases currency depreciation will drive further inflation.
“Although the region may receive some aid from the international donor community, aid is unlikely to fully shield vulnerable households given the likely shortages of basic food staples like cereals,” it said.