Ripple effects of Ukraine war have exacerbated a global cost of living crisis unseen in at least a generation, which no country or community can escape, according to the policy brief by the Global Crisis Response Group (GCRG). An estimated 1.6 billion people in 94 countries are exposed to at least one dimension of the crisis, with around 1.2 billion living in ‘perfect-storm countries severely vulnerable to all three dimensions, the report said.
After two years of fighting COVID-19, the world economy has been left in a fragile state. Today, 60 per cent of workers have lower real incomes than before the pandemic, the report said. It further noted that 60 per cent of the poorest countries are in debt distress or at high risk of its developing countries miss $1.2 trillion per year to fill the social protection gap, and $4.3 trillion is needed per year-more money than ever before to meet the Sustainable Development Goals (SDGs), the brief said.
COST OF LIVING; A NEW REALITY
UN Secretary-General António Guterres said that the message was clear and insistent that countries must act now to save lives and livelihoods.
“Three months into the Russian invasion of Ukraine we face a new reality. For those on the ground, every day brings new bloodshed and suffering. And for people around the world, the war is threatening to unleash an unprecedented wave of hunger and destitution, leaving social and economic chaos in its wake,” he said.
Meanwhile, UN Trade chief Rebeca Grynspan who co-leads the CCRG stream on finance, noted that the world was in a race against time. She said that inaction would be more costly than finding solutions.
“The cost-of-living crisis could spark a ‘cycle of social unrest leading to political instability”, she warned and said that the current food crisis may rapidly turn into a food catastrophe of global proportions in 2023. She said if the war continues, and grain and fertilizer high prices persist into the next planting season, shortages of foods such as rice will occur, affecting billions worldwide.
DEALING SITUATION ERODED
As the war erupted, global average growth prospects have been revised downward; many countries’ fiscal balances have deteriorated, and the average household has lost 1.5.per cent in real income due to price increases alone, the brief said.
Further, it said: ”worldwide, more people have been-facing famine-like conditions, and more people have faced severe hunger emergencies. The lingering effects of the pandemic coupled with the war in Ukraine and the impacts of climate change, are likely to further increase again the ranks of the poor. And as poverty increases so does vulnerability, particularly for women and girls.”
Million more people are expected to face chronic undernourishment globally in 2023 if the reduction in food exports from the Russian Federation and Ukraine result in lower food availability worldwide
The authors say that higher energy costs, trade restrictions and a loss of fertilizer supply from the Russian Federation and Belarus have led to fertilizer prices rising even faster than food prices. They warned that this could mean global food production in 2023 may not be able to meet rising demand.
The authors warn that If the war continues and high prices of grain and fertilizers persist into the next planting season, food availability will be reduced at the worst possible time, and the present crisis in corn, wheat and vegetable oil could extend to other staples, affecting billions more people.
- Bring stability to global markets, reduce volatility and tackle the uncertainty of commodity prices and there mg cost of debt. There will be no effective solution to the food crisis without reintegrating Ukraine’s food production, as well as the food and fertilizer produced by the Russian Federation into world markets – despite the war
2. ncrease people and countries capacity to cope. This means helping the most severely exposed countries help their poor and vulnerable populations, by increasing countries fiscal space and liquidity access so that they can strengthen social protection systems and safety nets and hence enhance the ability of people to deal with adversity,
3. G 7 and G20 countries need to rise to the challenge in putting forward debt-restructuring instruments that are fit for purpose. Strong political will across the multilateral community is needed. Piece-meal approaches will not work.