UNCTAD (United Nations Conference on Trade and Development) has just published a new document on the consequences of disruptions in the Strait of Hormuz for global trade and development.
The document notes that the current shock in the Middle East comes at a time when many developing economies are struggling to service their debt, with limited fiscal space and a constrained capacity to absorb further price shocks.
It adds that rising prices for energy, transport, and food are likely to weigh on public finances and place greater pressure on household budgets, potentially increasing economic and social tensions and complicating progress toward sustainable development, particularly in economies that rely heavily on imports of energy, fertilizers, and basic commodities.
UNCTAD’s document notes that increases in energy, fertilizer, and transport costs—including freight rates, bunker fuel prices, and insurance premiums—could lead to higher food costs and intensify living-cost pressures, especially for the most vulnerable.
“Similar repercussions have been observed during recent global shocks, notably the COVID-19 pandemic and the early stages of the war in Ukraine, demonstrating how disruptions affecting energy, transport, and agricultural inputs can ripple through interconnected markets,” UNCTAD notes.
