Higher and more volatile global food prices could knock $161 billion off China's economy and $49 billion off India's, the United Nations (UN) warned on Wednesday.
These two massive emerging economies would suffer the biggest hit in real terms if food prices doubled, the UN said in a joint report with Global Footprint Network, a climate change research group.
The researchers aimed to assess the economic risk to the world if food prices rose and became more volatile, as some predict. The report gave no time frame for the estimated effect on growth. When contacted by CNBC, the report's lead author said it would take only two years to knock the stated sum off China's economy, in a forwarded statement.
"Food prices are one of the most important channels by which environmental risks affect national economies," Achim Steiner, the executive director of the UN's environment program, said in a media release accompanying the report.
The supply and demand for food will grow increasingly unbalanced, the UN forecast, as rising world population and income boosts consumption and climate change and scarcer resources disrupt production.
Although higher food prices would boost some countries' economies, the impact overall would be highly negative.
The economy that would expand the most in absolute terms would be the U.S., but only by $3.3 billion — 50 times less than the impact on China.
"Identifying all relevant environmental risks is crucial to investing not only in equities but also sovereign bonds … disruptions to our food system represent one substantial environmental risk that both investors and governments may be largely overlooking," Susan Burns, co-founder of Global Footprint Network, said in the report's media release.
- US: $3.3 billion
- Paraguay: $1.8 billion
- Australia: $1.5 billion
- Uruguay: $1.5 billion
- Brazil: $1.2 billion
- China: $161 billion
- India: $49 billion
- Nigeria: $41 billion
- Indonesia: $22 billion
- Japan: $19 billion
Countries with lower sovereign credit ratings tended to be at greater risk from a food price spike. Those that would be worst hit in percentage terms were all in Africa — namely, Benin, Nigeria, Ivory Coast, Senegal and Ghana.
Egypt, Morocco and Philippines would suffer the most in terms of the combined knock to GDP, current account and inflation.