Is food the new oil?

Standard & Poor's says ongoing high food costs will significantly increase the susceptibility of some countries to negative ratings movements.
Soaring global food prices constitute a negative exogenous shock for numerous rated sovereigns. In this review we conclude that although a food price rise in itself is unlikely to be the direct cause of negative ratings action, for many sovereigns, ongoing high food costs will significantly increase overall susceptibility to negative rating movements by exacerbating already weak external and fiscal positions, or by increasing the potential for political and social unrest.

Sovereigns facing elevated vulnerability comprise a number of small island economies and low-income, non-investment-grade states. They face the unfolding shock from a position of limited fiscal, external, and political buffers, often in combination with inherent structural or natural constraints that make countervailing fiscal or...
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