Climate-Induced Food Price Shocks and Macroeconomic Outcome in Sub-Saharan Africa

This study explores the connections between food prices, climate anomalies, and macroeconomic outcome (GDP Growth) in 10 countries in Sub-Saharan Africa, including Nigeria, South Africa, Ethiopia, Kenya, Angola, Ghana, Côte d’Ivoire, DR Congo, Senegal and Uganda. The study explores both short- and long-run dynamics using a Panel Autoregressive Distributed Lag (Panel ARDL) model, with a specific emphasis on the effects of climate-induced food price shocks. Important factors include food imports as a percentage of merchandise imports, the Food Price Index, and climate anomalies as measured by land temperature fluctuations and their interactions. These countries’ rapid susceptibility to climatic changes is highlighted by the short-run results, which show that climate anomalies severely impair GDP growth with p-value estimated at 0.0424. While food prices and climatic anomalies both contribute to economic growth over the long run, their interaction has a strong negative impact, indicating that simultaneous rises in both put downward pressure on growth with an estimated p-value of 0.0000. Furthermore, a large reliance on food imports has a negative impact on economic performance that never goes away (p-value = 0.0000). The study suggests stabilizing food prices, reducing dependency on food imports, and investing in climate-resilient agriculture. These results highlight the significance of combining climate and food policy approaches to foster sustainable growth and increase economic resilience in the face of growing environmental and food security issues in Sub-Saharan Africa.