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Russia’s invasion of Ukraine appears to have created a “perfect storm” that unleashed multiple food, energy and debt crises around the world with devastating effects on developing countries, the United Nations warned in a report on Wednesday.
“The war in Ukraine, in all its dimensions, is having alarming cascading effects on a global economy already battered by COVID-19 and climate change, with particularly dramatic implications for developing countries,” the report warns. “Recent projections from UNCTAD [the United Nations Conference on Trade and Development] estimate that the global economy will be a full percentage point of GDP growth below expectations due to the war severely disrupting already strained food, energy and financial markets.”
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The report describes this disruption as a “perfect storm” that would “verge on the brink of a global debt crisis.”
Russian President Vladimir Putin speaks during the plenary session of the Valdai Discussion Club October 21, 2021 in Sochi, Russia. (Mikhail Svetlov/Getty Images)
Ukraine and Russia provide about 30% of the world’s wheat and barley, about 20% of corn and more than half of the sunflower oil. Russia is the world’s largest natural gas exporter and the second largest oil exporter. Russia and its neighbor Belarus together export about 20% of the world’s fertilizers.
Partly due to the war, “commodity prices are reaching record highs everywhere,” the report says. “Food prices are 34% higher than this time last year and have not been higher since [the U.N.’s Food and Agriculture Organization] started recording them. Likewise, crude oil prices are up around 60% and gas and fertilizer prices have more than doubled.”
The Observatory on Economic Complexity reports that 25 percent of the world’s wheat comes from Russia and Ukraine.
These disruptions will hurt developing countries the most, and the report warns that higher food prices are coupled with civil unrest. In other words, the war in Ukraine can trigger mass protests and even civil wars in other countries.
According to the report, up to 1.7 billion people are “severely exposed” to the effects of the Ukraine war on global food, energy and financial systems. Of these 1.7 billion people, 553 million are already poor and 215 million are already undernourished.
A monument to Taras Shevchenko, a Ukrainian poet and a national symbol, is seen with bullet marks against the background of an apartment building destroyed in Russian shelling in the central square in Borodyanka, Ukraine, Wednesday, April 6, 2022. (AP Photo/Efrem Lukatsky)
“The effects of the war are global and systemic,” UN Secretary-General Antonio Guterres said at a briefing on the report, CBNC reported.
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“Inflation is rising, purchasing power is falling, gross prospects are shrinking and development is faltering, and in some cases profits are falling,” Guterres added. “Many emerging markets are drowning in debt as bond trading has been picking up since last September, now leading to elevated premiums and exchange rate pressures.”