Rising Food and Energy Prices in Europe and Central Asia
The purpose of this paper is to illustrate the channels through which rising commodity prices might affect countries in the Europe and Central Asia Region (ECA) in the short run and to indicate which countries are most likely to be significantly affected. This paper discusses the effects of the global food and energy price increases on ECA countries from two perspectives: (a) impacts on the macro-economy through inflation, the trade balance, fiscal accounts and growth; and (b) distributional impacts within countries. It aims to highlight vulnerabilities to rising commodity prices and discusses some policy interventions to mitigate the impact of rising prices. It puts the ECA experience in the context of the last commodity price increase as well the recent global economic crisis. Section one summarizes the state of global commodity markets. Section two discusses the main macroeconomic channels through which commodity price increases affect the economy. Section three discusses the potential poverty impacts of the price increases and the ability of countries' social assistance systems to deal with the heightened need for social assistance. It also discusses country responses to the crisis to date with reference to policies followed during the 2008 price hikes. Section four examines ECA's agriculture sector and potential responses to the commodity price increase and price volatility. Section five discusses the energy sector. Bank support to ECA countries to help deal with commodity market a development is discussed in annexes one.
Summary: | The purpose of this paper is to
illustrate the channels through which rising commodity
prices might affect countries in the Europe and Central Asia
Region (ECA) in the short run and to indicate which
countries are most likely to be significantly affected. This
paper discusses the effects of the global food and energy
price increases on ECA countries from two perspectives: (a)
impacts on the macro-economy through inflation, the trade
balance, fiscal accounts and growth; and (b) distributional
impacts within countries. It aims to highlight
vulnerabilities to rising commodity prices and discusses
some policy interventions to mitigate the impact of rising
prices. It puts the ECA experience in the context of the
last commodity price increase as well the recent global
economic crisis. Section one summarizes the state of global
commodity markets. Section two discusses the main
macroeconomic channels through which commodity price
increases affect the economy. Section three discusses the
potential poverty impacts of the price increases and the
ability of countries' social assistance systems to deal
with the heightened need for social assistance. It also
discusses country responses to the crisis to date with
reference to policies followed during the 2008 price hikes.
Section four examines ECA's agriculture sector and
potential responses to the commodity price increase and
price volatility. Section five discusses the energy sector.
Bank support to ECA countries to help deal with commodity
market a development is discussed in annexes one. |
---|