U.S. Drought Threatens Global Economy, Food Security, HSBC Report Warns
“America’s worst drought for 25 years is threatening the global economy as it cripples the country’s grain production and sends the price soaring,” the International Business Times reports, adding, “According to a report by HSBC, bloated food prices loom over the global economy and present the temptation for governments to hoard produce” (Croucher, 8/20). “When food prices spike and people go hungry, violence soon follows, [scientists and activists] say,” Al Jazeera writes, adding, “Riots caused by food shortages — similar to those of 2007-08 in countries like Bangladesh, Haiti, the Philippines and Burkina Faso among others — may be on the horizon, threatening social stability in impoverished nations that rely on U.S. corn imports” (Kennedy, 8/21).
“World Bank data shows that overall food costs are higher but not yet at record levels of 2007-08, which pushed millions into poverty as food prices rose across the board in tandem with sky-rocketing oil prices,” Reuters notes (Wroughton, 8/21). However, “[e]ven if prices stabilize at these levels, we are likely to see headline inflation rates rise across the world in the coming months, particularly in the emerging economies where food accounts for a larger proportion of household spending,” said Karen Ward, senior global economist at HSBC, according to the Guardian (Elliott, 8/20). “‘Our recommendation is that countries prepare very early on,’ [Juergen Voegele, director of the World Bank’s Agriculture and Rural Development Department] said,” according to Reuters. “As long as our food stocks are so low, (price) volatility will not go away easily,” he added, the news service writes (8/21).