World heading towards worst food crisis in recent history: Economists

The world is heading towards the worst food crisis in recent history and the Middle East and North Africa (Mena region) will face severe food security issues in the coming years with the Ukraine war exacerbating the situation, according to a new global study released on Tuesday.

Released by the World Economic Forum’s Community of Chief Economists, the study revealed that with wheat prices expected to increase by over 40 per cent this year and prices for vegetable oils, cereals and meat at all-time highs, the war in Ukraine is exacerbating global hunger and cost-of-living crisis.

“Over the next three years, chief economists expect food insecurity to be most severe in sub-Saharan Africa and the Middle East and North Africa. At the current trajectory, the world is on track for the worst food crisis in recent history, compounded by the additional pressure of high energy prices,” the report said.

“We are at the cusp of a vicious cycle that could impact societies for years. The pandemic and war in Ukraine have fragmented the global economy and created far-reaching consequences that risk wiping out the gains of the last 30 years. Leaders face difficult choices and trade-offs domestically when it comes to debt, inflation and investment,” said Saadia Zahidi, managing director at the World Economic Forum.

She called on businesses and governments to realise the absolute necessity of global cooperation to prevent hunger for millions around the world.

A study conducted by World Trade Organisation last week said that the war in Ukraine has not only created a humanitarian crisis of immense proportions but has also dealt a severe blow to the global economy.

“The brunt of the suffering and destruction are being felt by the people of Ukraine themselves but the costs in terms of reduced trade and output are likely to be felt by people around the world through higher food and energy prices and reduced availability of goods exported by Russia and Ukraine,” WTO said.

“Poorer countries are at high risk from the war since they tend to spend a larger fraction of their incomes on food compared to richer countries,” it added.

Inflation up, wages down

The majority of chief economists surveyed by the World Economic Forum expect high or very high inflation in 2022 in all countries except China and East Asia – with 96 per cent expecting high or very high inflation in the US, 92 per cent for Europe and 86 per cent for Latin America.

In parallel, two-thirds of chief economists expect that average real wages will decline in the near term in advanced economies, while one-third are uncertain. Ninety per cent of those surveyed expect average real wages to fall across low-income economies.

The World Economic Forum on Tuesday called for a new collaboration between humanitarian and development organisations, businesses, investors and entrepreneurs to make a difference in the lives of the nearly one billion people living in fragile and conflict-affected settings worldwide.

“It takes more than a single intervention to unleash transformational change in complex ecosystems. To truly leverage the potential for positive and sustainable social impact while meeting investor demand for returns, new ways of collaboration across sectors are needed,” said Børge Brende, President of the World Economic Forum.

• MENA