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Russia’s invasion of Ukraine appears to have unleashed a “perfect storm”, triggering multiple crises around the world in food, energy and debt, with devastating effects for the developing countries, the United Nations warned in a report on Wednesday.
“The war in Ukraine, in all its dimensions, is producing alarming cascading effects on a global economy already strained by COVID-19 and climate change, with particularly dramatic impacts on developing countries,” the report warns. “Recent projections from UNCTAD [the United Nations Conference on Trade and Development] estimate that the global economy will be one percentage point lower in GDP growth than expected due to the war, which is severely disrupting already tight food, energy and financial markets. »
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The report describes this disruption as a “perfect storm”, coming “on the brink of a global debt crisis”.
Ukraine and Russia provide around 30% of the world’s wheat and barley, around 20% of its corn and more than half of its sunflower oil. Russia is the world’s largest exporter of natural gas and the second largest oil exporter. Russia and its neighbor Belarus together export around 20% of the world’s fertilizers.
Partly as a result of the war, “commodity prices are reaching record highs across the board,” the report notes. “Food prices are 34% higher than the same time last year and have never been higher since. [the U.N.’s Food and Agriculture Organization] started recording them. Similarly, crude oil prices have increased by about 60%, and gas and fertilizer prices have more than doubled. »
These disruptions will hurt developing countries the most, and the report warns that rising food prices are correlated with civil unrest. In other words, the war in Ukraine can trigger mass protests and even civil wars in other countries.
As many as 1.7 billion people are “highly exposed” to the effects of the war in Ukraine on global food, energy and financial systems, the report notes. Of these 1.7 billion people, 553 million are already poor and 215 million are already undernourished.
“The impact of the war is global and systemic,” UN Secretary-General Antonio Guterres said during a briefing on the report, CBNC reported.
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“Inflation is rising, purchasing power is eroding, gross outlook is shrinking and development is stalling and in some cases earnings are shrinking,” António Guterres added. “Many developing economies are crippled by debt, with bond transactions already on the rise since last September, which is now leading to higher premiums and pressure on exchange rates.”