Inflation After Ukraine War Pushes 71 Million More Into Poverty
DUBAI, United Arab Emirates — A staggering 71 million more people around the world are experiencing poverty as a result of soaring food and energy prices that climbed in the weeks following Russia’s invasion of Ukraine, the United Nations Development Program said in a report Thursday.
UNDP estimated that 51.6 Million more people were in poverty within the first 3 months of the war. These individuals lived on $1.90 per person or less. This pushed the total number globally at this threshold to 9% of the world’s population. Another 20 million people fell below the $3.20 per day poverty threshold.
Low-income families tend to spend 42% on food, but Russia was sanctioned by the West. This led to a rise in fuel prices and increased demand for staple foods like sugar, wheat and oil. Ukraine’s blocked ports and its inability to export grains to low-income countries further drove up prices, pushing tens of millions quickly into poverty.
“The cost of living impact is almost without precedent in a generation… and that is why it is so serious,” UNDP Administrator Achim Steiner said at the launch of the report.
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The rate at which people fell into poverty was faster than that of those who were experiencing economic hardship at the height of the pandemic. 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 Russia’s invasion of Ukraine in late February.
“The speed of this is very quick,” said George Molina, UNDP chief economist and author of the report.
Haiti, Argentina and Iraq are some of the worst affected countries by inflation. For those who are already below the poverty line, in countries such as Afghanistan, Mali and Nigeria, the effects of inflation can be even more severe.
On June 20, 2022, children play in the vicinity of their houses built on land that was squatted by many poor families from Rio de Janeiro.
The total number of people living in poverty, or are vulnerable to poverty, stands at over 5 billion, or just under 70% of the world’s population.
Another U.N. report released 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 is a need for the global economy to step up, Steiner said, adding that there is enough wealth in the world to manage the crisis, “but our ability to act in unison and rapidly is a constraint”.
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UNDP suggests that governments should not spend billions of dollars on energy subsidies. Instead, they should target spending to reach those most affected people with targeted cash transfers. This can stop 52.6 million more people falling into poverty every day at $5.50 per day.
For cash-strapped and debt-laden developing countries to achieve this, the UNDP called for an extension of debt payments that had been in place during the pandemic among the world’s richest nations.
Steiner said doing so is not only an act of charity but is also “an act of rational self interest” to avoid other complex trends, such as economic collapse in countries and popular protests already taking place in communities across the world.
The war in Ukraine has roiled a region known as the world’s bread basket. Before the war, Russia was the world’s largest exporter of natural gas and the second biggest exporter of crude oil. Russia and Ukraine together accounted almost 25% of world wheat exports, and over half of worldwide sunflower oil exports.
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