The United Nations has projected lasting impacts on scores of economies in spite of the Strait of Hormuz reopening, citing the months-long disruption to transit in the crucial route.
A new report released this week by the UN Trade and Development indicates many economies are exposed to oil and food price shocks as they largely rely on the importation of oil/cereal products.
Six countries face cereal-import exposure, 6 face energy-import exposure, while the 61 most vulnerable economies facing dual exposure are among the least developed countries and small island developing states.
Based on UNCTAD Statistics, their respective net imports of oil, petroleum products, cereals, and cereal products during the 2022-2024 period formed between 2.4% and 25% of gross domestic product.
Such countries and small islands include Afghanistan, Antigua and Barbuda, Benin, Cabo Verde, Eritrea, Fiji, Gambia, Grenada, Kiribati, Lesotho, Liberia, and Madagascar.
Others are The Maldives, Mauritania, Mauritius, Micronesia, Mozambique, Palau, Saint Lucia, Somalia, Sierra Leone, Timor-Leste, Togo, Tonga, Vanuatu, and Yemen.
UNCTAD said that though the Hormuz reopening is “a first step toward progressive recovery of energy markets and international trade,” negative effects of the closure have rippled through the global economy.
“These shocks will be felt for many months, with developing countries bearing the heaviest impacts,” UN Secretary-General António Guterres noted. “I call on parties to honour the ceasefire and redouble efforts.”
According to UNCTAD, the exposure of vulnerable economies to sudden price jumps in oil and fertilizer can lead to persistent inflation, which squeezes household budgets and makes food and healthcare costly.
The intergovernmental organization stressed that the path to rebound can be “longer, uneven and costly” for economies at risk, urging concerted international support to improve their ability to cope.
Tighter public finances mean less room to cushion hikes, as certain nations now face difficulties in mobilizing resources, a heavy debt servicing burden, a drop in remittances, and declining international aid.
The pressing issues highlighted by UNCTAD include normalization of trade, shipping, and value chains, energy shock impact, food insecurity, decreasing development aid, and diversification of trade sources.
