Hunger pains: The sustainability of food inflation in Asia

In a new white paper, Robeco’s fundamental sovereign strategist Philip McNicholas and SI specialist Laura Bosch explore how sustainability factors impact our near-term assessment of financial markets, and the longer-term solutions that can help increase economic resilience. They highlight the interaction between geopolitical issues and the ability to feed growing populations.

Their research looks at how the impact of climate change and higher natural gas prices resulting from the Russia-Ukraine conflict has impacted fertilizers prices and placed upward pressure on food inflation. The lens of the Sustainable Development Goals is used, since food inflation will have a measurable impact on SDGs 1, 2 and 3 in the areas of hunger, poverty, and health and well-being respectively.

Rising inflation could also result in higher interest rate policies, as price pressures build together with fiscal pressures, which in turn could impact on the economy reflected in SDGs 8 (decent work and economic growth) and SDG 9 (industry, innovation and infrastructure). All of this can impact companies in various ways, from rising funding costs to increasing wage pressures.

The paper focuses on the likely macroeconomic impact on the major Asian food-growing regions of China, India, Indonesia and Thailand. Each faces different macroeconomic, political and social consequences from these evolving dynamics, with potentially underappreciated ramifications that could extend beyond their respective domestic markets.