IMF says suspension of Black Sea grain deal could raise grain prices by 10% to 15%

WASHINGTON - The International Monetary Fund (IMF) estimated that

Russia’s exit from a deal allowing Ukrainian exports via the Black Sea

could drive global grain prices up by 10 per cent to 15 per cent, but said it was continuing to assess the situation.

IMF chief economist Pierre-Olivier Gourinchas told reporters that

the Black Sea grain deal

had been “very instrumental” in ensuring ample supplies of grain could be shipped from Ukraine, easing price pressures on food. Its suspension would likely put upward pressure on prices, he said.

“We’re still assessing where we’re going to land, but you would be thinking that somewhere in the range of 10 to 15 per cent increase in prices of grains is a reasonable estimate,” he said.

The IMF on Tuesday forecast that global headline inflation would fall to 6.8 per cent in 2023, from 8.7 per cent in 2022, and drop to 5.2 per cent in 2024, with core inflation declining more gradually to 6 per cent in 2023, and then to 4.7 per cent in 2024.

Professor Gourinchas said that it could take until the end of 2024 or early 2025 for inflation to come down to central bankers’ targets and for the current cycle of monetary tightening to end.

The IMF said last week that Russia’s withdrawal from the initiative, which was

brokered by Turkey and the United Nations

last July, would hit regions that rely heavily on shipments from Ukraine, including North Africa, the Middle East and South Asia.

The deal had allowed Ukraine to export around 33 metric tonnes of grain by sea and turned out to be an important factor for global food security.

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

About 60 per cent of Ukraine’s exports were shipped via solidarity lanes and 40 per cent went via the Black Sea while the UN-backed grain deal was in operation. REUTERS