00:00Okay, so let's bring in Robert Stager, Chief Economist for the WTO.
00:05Rob, thanks so much for joining us.
00:07It strikes me this is not a great time to be trying to predict what the economy is going to
00:12do.
00:14Thank you, Sally. Nice to be with you. That's an understatement.
00:18How unusual is it to have a sort of second case scenario
00:22when you come up with your review, with your predictions from the year?
00:26Because you've got this baseline, and then you've got if the energy prices continue.
00:31Is this something that you've become more used to, given the pandemic and the Ukraine conflict,
00:36or is this quite unusual?
00:39Well, we just presented our outlook here at the WTO to a press conference,
00:46and we joked that it seems that now every year there's a new shock
00:51that happens around the first quarter of the year, and that's when our report comes out.
00:55So we're kind of used to it.
00:57In many of our previous reports, we have had alternative scenarios.
01:03We've looked at the numbers briefly, but I'm wondering if you could give us a sense
01:06of the real impact on lives and how it's going to affect people.
01:10If this worst-case scenario, the ongoing high oil energy prices continue, what are we in for?
01:17Well, yes.
01:18Of course, the headline impact is on oil prices and natural gas prices and energy more generally,
01:28but we can't forget that fertilizer is also a major throughput through the Strait of Hormuz.
01:3630% of world trade in fertilizer typically runs through the Strait.
01:42So that is a major impact on food importing countries, on fertilizer importing countries,
01:49and has food security implications that go beyond the energy implications.
01:57Of course, the energy implications are first order as well, and they don't hit all countries the same.
02:03Countries that are net importers of oil and natural gas are going to be hurt by these higher prices.
02:11Their GMPs or GDPs are going to be lower, and their imports are going to be lower
02:17because they have more difficulty affording those imports.
02:20Countries that are net exporters, who are not impacted directly by the closing of the Strait of Hormuz,
02:27actually can benefit from an economic perspective in terms of their GDP
02:33because they are selling this energy to the world now at a higher price.
02:38So the impacts are uneven on the energy side across countries.
02:44Some benefits, some loose, straight-up economic, but the fertilizer is an impact that hurts many countries.
02:53And that, of course, speaks to food security as well, Rob.
02:56Sorry to jump in there.
02:57Very briefly, if you could, which countries are, in your view, best prepared to weather whatever storm may come,
03:03and which are most exposed?
03:05Yes, so in terms of food security, countries like India and Brazil have major demands and needs of fertilizer
03:16through the Strait of Hormuz, and those countries are likely to be impacted by the fertilizer aspect.
03:23In terms of the energy impact, Europe is a net energy importer, and especially for natural gas,
03:34whose price has risen dramatically for Europe.
03:39That is definitely a downside.
03:42For countries like Russia, who are net exporters, large exporters of energy,
03:50and to some extent, the U.S., the exporter price effects are not bad,
03:58and they actually can improve the GDP of those countries.
04:02Thank you so much for chatting to us.
04:04That's Rob Stager, Chief Economist for the WTO.
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