The food sectors in Indonesia and India have been identified as being most exposed to overall risk during the post-Covid recovery according to a new report released today by Food Industry Asia (FIA) and Oxford Economics.
Applying key data from a new tool, the Economic Recovery Matrix for Asia’s food industry, found Indonesia standing out as the economy with greatest challenges to recovery in the sector, with Philippines and India close behind. In Indonesia, key risks centre around the need for fiscal tightening, which could undermine both demand and supply conditions. For India, the depth of the impact on food spending in the coming couple of years will be greater than elsewhere, and the increase in barriers to food trade is an additional worry. And in Philippines the high share of tourism in GDP and fiscal risks are key concerns.
The Economic Recovery Matrix examines demand and supply side recovery factors for the sector, as the battle to contain and recover from the COVID-19 pandemic continues.
According to Tom Rogers, Head of Macroeconomic Consulting – Asia, while government across Asia had largely avoided introducing new barriers to trade in food through the first few months of the year, latest data on trade seemed to suggest increasing restrictions.
“Increased trade restrictions on the supply-side could have further implications on an industry already impacted by demand-side developments such as the predicted 5 percent drop in household spending across Asia. This will very likely have an impact on the food industry when coupled with measures such as the need for austerity measures to restore public finances and potential further shocks to the global economy,” said Rogers.
“In this last of three papers looking at the impact of the COVID-19 pandemic on the food industry across Asia, by incorporating a range of issues from our first two papers, not only have we provided some forward looking data to spark recovery for the food sector, but we have also mapped out a risk framework for understanding the challenges the industry may face in the post-pandemic era,” says Steven Bartholomeusz, Policy Director FIA.
FIA and Oxford Economics produced three papers in the series that looked at the impact of Covid-19 on Asia’s food industry. Paper One quantified in more depth the key trading relationships making up the pan-Asia food supply chain and assessed the evolving evidence on price pressures along the supply chain, while Paper Two looked at fiscal risks for Asia’s food sector as well looking at other economic risk factors that form part of the post-COVID landscape.
