Countries Deploy 1.1% of GDP to Allay Inflation and Food Insecurity

To bring relief in the face of growing food insecurity and historic levels of inflation, the governments of Central America, Panama, and the Dominican Republic (CAPARD), Mexico and Haiti have passed policy measures worth an average of 1.1% of their gross domestic products. Over 62 million people in these countries experienced food insecurity following the pandemic. Recent food price hikes have intensified the problem, and a higher proportion of people are food insecure in this subregion than anywhere else in Latin America and the Caribbean. 

These are the findings of the study “Food Security in Central America, Panama, the Dominican Republic, Mexico, and Haiti” (Spanish version only), which was recently published by the Inter-American Development Bank (IDB). The study gives an overview of the region’s post-pandemic food security outlook, taking rising inflation into account.

Countries must take short-and long-term steps to preserve food security 

The IDB study contains policy recommendations with immediate and long-term ways to shore up food security for families and affected industries. The proposals include targeted transfers, food aid programs, support for the agricultural industry, and commercial measures.

The report also explores structural changes to bolster food systems and prevent future crises, like investing in public goods; access to agricultural finance; research, development and innovation in the sector; and more open international trade. These steps should incorporate a gender perspective into their design, since women are more vulnerable to the fallout from economic shocks.

While moderate to severe food insecurity in this region was already above the average for Latin America and the Caribbean, it has been exacerbated by the global inflationary escalation caused by the pandemic and the war between Russia and Ukraine, which has led to increases in the prices of basic goods. In a typical country in the region, over 40% of the consumption of corn, rice, and wheat comes from imports. 

Inflation has become the chief concern of households across the region. The percentage of households whose income cannot cover the cost of basic food necessities is estimated to have risen by over 5 percentage points since 2019. Households headed by women or informal workers and rural households have borne the brunt of this trend.

Download the study (in Spanish) here.