IMF says Black Sea grain deal could increase prices by 10-15%

The logo of the IMF in this undated photo.  - AFP/File
The logo of the IMF in this undated photo. – AFP/File

WASHINGTON: The International Monetary Fund (IMF) believes it could push global prices by 10-15% if Russia pulls out of a deal allowing Ukrainian grain exports from the Black Sea, but said it is monitoring the situation to assess it. reuters,

IMF chief economist Pierre-Olivier Gourinchas told reporters that the Black Sea grain deal played a “crucial” role in ensuring adequate supplies of grain from Ukraine. This has helped in reducing the price pressure on food, he said. Its suspension is likely to put pressure on prices, he said.

“We’re still assessing where we’ll end up, but you would imagine a 10 to 15% increase in grain prices is a reasonable estimate,” he said.

The IMF on Tuesday projected that global headline inflation would decline from 8.7% in 2022 to 6.8% in 2023, falling to 5.2% in 2024, with core inflation gradually declining to 6.0% in 2023 and then 4.7% in 2024.

Gaurinchas told reuters It may take until late 2024 or early 2025 until inflation reaches central bankers’ targets and the current cycle of monetary tightening ends.

The IMF said last week that Russia’s withdrawal from the initiative, which was mediated by Turkey and the United Nations last July, would affect regions that rely heavily on shipments from Ukraine, including North Africa, the Middle East and South Asia.

The agreement allowed Ukraine to export about 33 metric tons of grain by sea and proved to be an important factor for global food security.

The European Union said on Tuesday it is ready to export almost all of Ukraine’s agricultural produce through “solidarity lanes” – rail and road transport connections through EU member states bordering Ukraine.

About 60% of Ukraine’s exports were sent through the Solidarity Lane and 40% through the Black Sea, while a UN-backed grain deal was in place.

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