SCOTT DETROW, HOST:
In just over nine weeks, the Iran war has sent shock waves through the global economy with major signs of slowdown emerging across multiple parts of the world. Rising energy costs are fueling inflation, straining production and raising fears of a recession. We turn to our correspondents in Europe, Africa, Latin America and, first, Asia.
DIAA HADID, BYLINE: I'm Diaa Hadid, an international correspondent based in South Asia, a region which imports much of its energy and fertilizer from the Gulf. So this war is hitting hard, some places and people worse than others.
(SOUNDBITE OF TUK-TUK PASSING)
HADID: Consider K.S. Pradeep (ph).
K S PRADEEP: (Non-English language spoken).
HADID: He repairs tuk-tuks on a street in Colombo. That's the capital of Sri Lanka, an island of 22 million. And after the war began, Sri Lanka began rationing fuel. It imports two-thirds of its supply. Prices also rose. And that pushed up the price of transport, cooking gas, medicines and food.
PRADEEP: (Non-English language spoken).
HADID: Pradeep tells us he's working on a holiday to catch stray customers because business here has halved since the war began. He's only repairing two tuk-tuks a day, and he's only taking home about $10 a day. He says drivers have to choose between fixing their vehicles or buying food.
PRADEEP: (Non-English language spoken).
HADID: He says, "everything's more expensive, starting from a cup of tea." Pradeep says his own family cooks less to save cooking gas. They eat cheaper food like watery curries. This is a coping strategy that Pradeep is deploying just weeks into this crisis, and there's likely millions like him. The World Food Organization says even before this crisis, some 20% of Sri Lankans were food insecure. Alongside the fuel shortages, there's fertilizer shortages because Sri Lanka used to import most of its needs from the Gulf. Farmers here say without fertilizer, they're planting less, including less rice. It's the main source of food here, so less yields could mean higher prices. And if the war continues, those fertilizer shortages will hit more upcoming planting seasons and may well ignite a South Asian hunger crisis.
(SOUNDBITE OF METAL BANGING)
EYDER PERALTA, BYLINE: I'm Eyder Peralta in Mexico. And here, the government has been trying to swim against the tide. They have pulled out all the stops to keep prices from going up. Fuel is being subsidized, and perhaps more importantly, the government has capped the price of tortillas at $1.22 a kilo. But for Mexicans at this market, it's not enough.
FRANCISCO JAVIER GUTIERREZ-FIALLO: (Speaking Spanish).
PERALTA: Francisco Javier Gutierrez-Fiallo (ph) says, "everything feels like it's out of control."
GUTIERREZ-FIALLO: (Speaking Spanish).
PERALTA: "The price of chicken suddenly spikes. The price of eggs goes up."
GUTIERREZ-FIALLO: (Speaking Spanish).
PERALTA: "I just feel like there's more instability than before."
Indeed, Mexico has struggled to control inflation. The price of tomatoes, for example, has jumped more than 100% compared to last year. Some chiles have jumped more than 50%. Gutierrez-Fiallo says everything is so expensive that he has stopped eating meat, and he just doesn't get it.
GUTIERREZ-FIALLO: (Speaking Spanish).
PERALTA: "I thought we were an oil-producing nation," he says. "It's not supposed to affect us."
The only thing that has remained stable is the tortilla, and that's because of the government cap. Juan Javier Cuevas (ph) owns a tortilla shop. He says corn keeps getting more expensive because fertilizer has become more expensive. He's almost at break even, and he doesn't know how much longer he will be able to respect Mexico's price cap.
JUAN JAVIER CUEVAS: (Speaking Spanish).
PERALTA: "The United States is to blame," he says, "for provoking a senseless war."
CUEVAS: (Speaking Spanish).
PERALTA: "And now, those of us who have nothing to do with it are having to pay the cost."
LAUREN FRAYER, BYLINE: I'm Lauren Frayer in London, where airlines are hiking ticket prices and canceling flights ahead of summer vacations. The head of the International Energy Agency, Fatih Birol, predicts...
FATIH BIROL: In Europe, we have maybe six weeks or so jet fuel left.
FRAYER: Supply concerns mean oil and gas companies are raking in record profits. This week, BP said its quarterly earnings more than doubled, unseen since Russia's full-scale invasion of Ukraine, while people face shock heating and fuel costs.
(SOUNDBITE OF HORNS HONKING)
FRAYER: In Ireland, angry truckers and farmers have blocked highways and the country's sole oil refinery in protest. The government there only narrowly survived a no-confidence vote, as it scrambled to boost fuel subsidies by nearly $1 billion. Germany is lowering fuel taxes. Britain is easing emissions standards. But across Europe, growing anger threatens to topple governments. British Prime Minister Keir Starmer is trying to lower expectations of relief anytime soon.
(SOUNDBITE OF ARCHIVED RECORDING)
PRIME MINISTER KEIR STARMER: I have to level with you about Iran because the truth is, the economic consequences could still be with us for some time.
FRAYER: The president of the European Commission says this could last months or years. The International Monetary Fund says Britain will take the biggest hit of any major economy because of its exposure to natural gas prices. The country's food and drink federation says food price inflation could triple by the end of this year. Energy and transport costs affect medicines as well. Mark Samuels, CEO of Medicines UK, an industry group, spoke to the BBC.
(SOUNDBITE OF ARCHIVED RECORDING)
MARK SAMUELS: In a matter of weeks, we'll either see price rises or shortages.
FRAYER: Amid this uncertainty, Starmer has lamented how events thousands of miles away in Iran are hitting his political fortunes. His center-left Labour Party is bracing for losses in next week's local and regional elections. Anti-establishment parties are gaining steam, especially on the far right. Lauren Frayer, NPR News, London.
JEWEL BRIGHT, BYLINE: I'm Jewel Bright in Lagos. And here, on the streets of Nigeria's biggest city, the fallout from the escalating conflict in Iran is already being felt. While Nigeria is a major oil producer, the benefits are not as straightforward as they might seem. Higher crude prices should boost government revenues, but Nigeria still imports much of its refined fuel, meaning, like elsewhere, consumers here are facing rising petrol prices at the pump. Across Lagos and other major cities, commuters are paying more just to get to work, and the frustration for people like businesswoman Mary Douglas (ph) is clear.
MARY DOUGLAS: It has affected me so badly that I don't even go - most times, I don't go out with my car anymore. I was shocked. The other day I was going to church. I didn't have much money on me. I had just 13,000. I didn't know they had increased the fuel price again.
BRIGHT: Food prices are following. Traders say the cost of moving goods has surged in just weeks. Economists say the situation exposes a long-standing vulnerability, Nigeria's reliance on imported fuel despite its oil wealth. Even with the new Dangote refinery here in Lagos, Nigeria's first and Africa's largest which was meant to cut reliance on imports, that hasn't yet led to cheaper fuel for consumers. Transport costs are also climbing. It's something realtor Adeleke Babatunde (ph) says he simply cannot understand.
ADELEKE BABATUNDE: We have crude in Nigeria, so that should not even affect us at all, because we have the crude, and we have the refinery. So why are we now suffering for other people's problem?
BABATUNDE: And the ripple effects don't stop there. The weakened naira, rising inflation and higher import costs are tightening the squeeze on households. Essential goods, from food to medicines, are becoming less affordable. For many Nigerians, this distant conflict is now a daily economic reality.
DETROW: That was Jewel Bright in Nigeria. You also heard from NPR's Lauren Frayer in the U.K., Eyder Peralta in Mexico and Diaa Hadid reporting from Sri Lanka. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
