Soaring food and energy prices around the world have led to an increase in global poverty, according to a UNDP report.
Pakistan, like many developing countries, is paying a heavy price for the war in Ukraine. Nearly 4% of its population could fall into poverty, according to a report by the United Nations Development Program (UNDP), published Thursday. “The world is facing an unprecedented crisis”, warns the international organization in this study carried out among 159 countries on the return of poverty since the invasion of Ukraine. The most affected regions include the Caspian Sea basin, the Balkans and sub-Saharan Africa. The UN points in particular to the most critical countries: Armenia, Burkina Faso, Haiti, Uzbekistan, Sri Lanka, Sudan, Tanzania and even Yemen.
In the space of just three months, 71 million people have thus fallen below the poverty line, because of inflation, the soaring prices of cereals, especially wheat and corn, and those of ‘energy. The impact is much stronger and faster than that of the pandemic which has put an end to the ebb of poverty for twenty years. “Inflation means that for many people around the world, the food they could afford yesterday is no longer accessible today,” worries UNDP boss Achim Steiner.
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Between half and two-thirds of the grain and energy price increases of the past twelve months have taken place since February 24, the date of the Russian invasion. As of May 31, 2022, the price of natural gas had jumped 166.8% in one year. Ukraine and Russia alone represent a quarter of world wheat exports and more than half of those of sunflower oil.
Targeted aid
The UN also notes the ineffectiveness of the measures taken by governments to curb inflation, at its highest level in forty years. Generalized subsidies, typically on fuels, are considered unsuitable because in reality they mainly benefit the wealthiest classes. And they are not very effective because they only help to limit the increase in poverty to only 20%. And 65% of these measures are concentrated in developing countries. It is better to transfer money targeted to the poorest, who are “fairer and more cost effective than general energy subsidies“, recommends the UN.
The report calls for aid of $0.14 a day paid to these vulnerable people. More than half of the world’s population would be affected, at an estimated cost of $17.5 billion. Above all, this policy would keep three-quarters of the 71 million new destitute people above the vulnerability threshold set at $5.50 a day.
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In addition, the phasing out of fossil fuel subsidies would accelerate the energy transition. Global warming is emerging as a major factor in impoverishment. In 2021, the World Bank demonstrated that it will push 68 to 132 million people into poverty by 2030.
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