The World Bank has warned of a possible new shock in global food prices, with the growing risk of strong El Niño weather conditions, which could add additional pressure on the agricultural sector, which is already suffering from high fertilizer costs as a result of the repercussions of the war in Iran.
And in its latest forecast for the global economy, the bank noted that “weather disruptions” linked to warming Pacific waters could exacerbate difficult conditions for food supply chains, which have also been affected by a near-partial disruption in trade through the Strait of Hormuz, one of the most vital corridors for transporting fuel and fertilizer.
Developments in the Middle East, coupled with the potential for El Niño conditions, could lead to food prices exceeding current expectations, the bank said, warning that small economies in sub-Saharan Africa would be most at risk due to weak insurance and protection tools against climate and food shocks.
And the conflict in the Middle East has already dampened global growth prospects this year, and caused a new wave of inflation after rising oil and gas prices following U.S. and Israeli strikes on Iran in late February.
And the World Bank expects global growth to slow from 2.9% in 2025 to 2.5% in 2026, the lowest level since the COVID-19 pandemic.
Economists said the combination of disruptions to food supplies and rising agricultural production costs due to fertilizer shortages could compound the global food security crisis and increase inflationary pressures.
And the chief economist of the UN Food and Agriculture Organization, Maximo Torrero, said that "the synchronization of climate shocks with supply shocks can reinforce each other, and lead to more severe effects on global markets."
And climate data confirm that El Niño is typically associated with increased rainfall in parts of South America, the southern United States, the Horn of Africa and Central Asia, while leading to drought in other regions such as Australia, Central America and parts of South Asia.
However, the economic effects of this phenomenon remain unstable, as they vary from one cycle to another according to the prevailing global conditions. In this context, experts said that the current cycle may be more sensitive due to the rise in energy and fertilizer prices resulting from geopolitical tensions.
And analysts pointed out that India is one of the most vulnerable economies to the effects of El Niño due to its heavy reliance on seasonal rains in agriculture, while the Central Bank of India warned of the need for “constant vigilance” against these risks.
Peru's central bank has also expressed concerns about the impact of the phenomenon on the fishing and agricultural sectors, while experts in Latin America have indicated that some countries such as Argentina may temporarily benefit from improved crop production.
And yet, experts say El Niño is likely to eventually lead to a global spike in food prices, with analysis by the European Central Bank showing that the strong phenomenon could raise food prices by up to 9% in 16 months, with effects lasting up to two years.
And economists warn that the continued frequency of climate and economic shocks will make it harder for central banks to treat them as temporary events, which could put additional pressure on them to keep interest rates high for longer, although that does not address the roots of supply-related inflation.
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