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Al Jazeera
Al Jazeera
World
Rifat Mohi Uddin

Inflation plunged 71 million into poverty since Ukraine war

The war in Ukraine has severely disrupted global markets for food and energy [File: Mariana Nedelcu/Reuters]

Some 71 million people worldwide are experiencing poverty due to soaring food and energy prices driven by Russia’s invasion of Ukraine, the United Nations Development Programme (UNDP) has warned in a new report.

Achim Steiner, the UNDP administrator, said at the launch of the report on Thursday that an analysis of 159 developing countries showed that the surge in crucial commodity prices this year was already hitting parts of Africa, the Balkans, Asia and elsewhere hard.

The 20-page report focused on addressing the cost of living crisis in developing countries. It estimated that 51.6 million more people fell into poverty in the first three months after the war, living off $1.90 a day or less. This pushed the total number globally at this threshold to 9 percent of the world’s population. An additional 20 million people slipped to the poverty line of $3.20 a day.

“This will have immediate and devastating effects on household welfare – with those in poverty and near-poverty typically hit hardest due to their higher energy and food budget share – posing significant policy challenges to governments during the response,” the report said.

The war in Ukraine has severely disrupted global markets for food and energy due to both countries’ large global market shares. Before the war began on February 24, Russia was the world’s largest and second-biggest exporter of natural gas and crude oil. Russia and Ukraine together accounted for almost a quarter of global wheat exports, 14 percent of corn exports, and more than half of sunflower oil exports.

Ukraine’s blocked ports and inability to export grains to low-income countries further drove up prices, pushing tens of millions into poverty and economic crisis.

The UNDP report said more than two-thirds of the 166.8 percent increase in natural gas over the 12 -month period ending on 31 May, 2022 has been recorded since the start of the war.

Among those countries likely facing high poverty impacts across all poverty lines are Armenia and Uzbekistan in the Caspian Basin; Burkina Faso, Ghana, Kenya, Rwanda, and Sudan in Africa; Haiti in Latin America; and Pakistan and Sri Lanka in South Asia, it noted.

The economic woes are increasing protests in many countries as they are struggling to meet their debt repayment obligations. More than half of the world’s poorest countries are in debt distress or at high risk of it, according to the UN.

In low-income countries, families spend 42 percent of their household incomes on food but as Western nations put sanctions on Russia, the price of fuel and staple food items like wheat, sugar, and cooking oil soared.

“The cost of living impact is almost without precedent in a generation … and that is why it is so serious,” Steiner said.

The speed at which this many people experienced poverty outpaced the economic pain felt at the peak of the pandemic, he added.

The UNDP noted that 125 million people experienced poverty over about 18 months during the pandemic’s lockdowns and closures, compared with more than 71 million in just three months after the Russia-Ukraine war.

“The speed of this is very quick,” said George Molina, UNDP chief economist and author of the report.

Another UN report released on Wednesday said world hunger rose last year, with 2.3 billion people facing moderate or severe difficulty obtaining enough to eat –  and that was before the war in Ukraine.

There was a need for the global economy to step up, Steiner said, adding that there was enough wealth in the world to manage the crisis, “but our ability to act in unison and rapidly is a constraint”.

The UNDP recommended that “targeted and time-bound cash transfers are the most effective policy tool to address the impacts.”

Steiner said doing so was not only an act of charity but also “an act of rational self-interest” to avoid other complex trends, such as the economic collapse in countries and popular protests already taking place in communities across the world.

“This cost-of-living crisis is tipping millions of people into poverty and even starvation at breath-taking speed,” Steiner said.

“With that, the threat of increased social unrest grows by the day.”

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