UN: Economic turmoil from Ukraine invasion hitting 1.7 billion globally

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Russia’s invasion of Ukraine has roiled global food and energy markets, exposing nearly a fifth of humanity to supply disruptions and the risks of poverty and hunger, UN chief Antonio Guterres warned on Wednesday.

The UN Secretary General said the invasion was “supercharging a three-dimensional crisis — food, energy and finance — that is pummelling some of the world’s most vulnerable people”.

He spoke as Russian forces continued shelling Ukrainian towns and cities in a war that began on February 24, killing thousands, hitting exports from “breadbasket” regions and prompting harsh sanctions against Moscow from mostly western nations.

“We are now facing a perfect storm that threatens to devastate the economies of developing countries,” Mr Guterres told reporters in New York.

“As many as 1.7 billion people — one third of whom are already living in poverty — are now highly exposed to disruptions in food, energy and finance systems that are triggering increases in poverty and hunger.”

A 22-page report released on Wednesday by the UN’s Global Crisis Response Group said 36 countries import more than half of their wheat from the breadbasket regions of Russia and Ukraine, where fighting has stopped farmers from planting crops.

They include many struggling and conflict-riven economies across the Middle East and Africa, including Egypt, Yemen, Libya, Syria, as well as wealthy importers in the oil-rich Gulf, such as Qatar and the UAE.

The British charity Oxfam said this week that Palestinian stockpiles of wheat could run out in three weeks because of 25 per cent price increases.

The group's country director Shane Stevenson said many Palestinians were “struggling to meet their basic needs".

Wheat prices have jumped by 30 per cent since the start of the year and fertiliser prices have doubled, the UN report says. Oil prices have surged by 60 per cent compared with last year, while natural gas prices have jumped by 50 per cent in recent months.

“As prices climb, so does hunger and malnutrition — especially for young children,” said Mr Guterres.

The study, titled the Global Impact of War in Ukraine on Food, Energy and Finance Systems, says many developing economies are being battered a second time after the ravaging effects of the coronavirus pandemic, supply line chaos and lockdowns.

“Many developing economies are drowning in debt, with bond yields already on the rise since last September, leading to increased risk premiums and exchange rate pressures,” said Mr Guterres.

“This is setting in motion a potential vicious circle of inflation and stagnation.”

Governments need to work together on “keeping a lid” on prices with a “steady flow of food and energy through open markets” and the lifting of export restrictions, said the former prime minister of Portugal.

Countries must “resist hoarding, and release strategic stockpiles and additional reserves” of food and energy, while shifting their economies to cleaner, renewable energy and supporting debt relief plans at this month’s World Bank meetings, he added.

The report makes no mention of the crippling economic sanctions that the US, Europe and others have imposed on Russia since it invaded Ukraine, which Moscow says is really to blame for supply shocks and inflation.

“Above all, this war must end,” said Mr Guterres.

“The people of Ukraine cannot bear the violence being inflicted on them. And the most vulnerable people around the globe cannot become collateral damage in yet another disaster for which they bear no responsibility.”