Milan Brahmbhatt's blog

Soaring food prices have suddenly become a major concern for policy makers in East Asia.  The price of rice - which provides one third of the region's caloric intake - is a particular worry.  Rice prices have been moving higher since around 2004, although this was from very depressed levels in the early years of the decade.  Prices surpassed $300 a ton in early 2006 for the first time since the late 1990s, kept moving higher, and then took off at an accelerating pace from late 2007:  up 11 percent in the the fourth quarter, then 56 percent in the first quarter of 2008 and then 61 percent in April 2008 alone. Prices touched over $1000 a ton on some days in April. Domestic food price and overall consumer price inflation has accelerated in most economies and the pace of poverty reduction in East Asia  in 2008 is - at a minimum - likely to slow .

A new World Bank report I have co-authored on Rising Food Prices in East Asia: Challenges and Policy Options argues that regional and international cooperation could play an important role in addressing the problem of surging food prices.   What, you say, is the World Bank advocating interference with market outcomes?  Well, it may be more a case of cooperation to undo the consequences of earlier interventions in the market which have contributed to the present high prices.  

"Testing Times Ahead" is the title of the World Bank’s just released April 2008 East Asia and Pacific Update.   As one of the team that put it together, I thought – before tottering off to bed – that readers might like a quick take - and a chance to comment - on some of the findings. 

Economic outlooks are always uncertain, to be sure, but the level of uncertainty about prospects for the world economy just now is extraordinary. That matters in a region as highly globally integrated as East Asia.   Forecasts for the US economy have been sliding lower for months but what’s less clear is how deep and protracted the downturn will be – underlying which are uncertainties about how much more widespread and intense the global financial turmoil that began last August will get.