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Soaring Prices Push 71 Million More Towards Poverty
This article is published in collaboration with Statista
by Florian Zandt
The repercussions of rising energy and food prices due to the ongoing war in Ukraine are felt by members of every income group, although for one subgroup in particular, exploding costs of living can become a matter of life and death. As the United Nations Development Programme (UNDP) points out, the poorest share of the world population will likely rise by as much as one percent if no policies are undertaken to curb the impacts of climbing prices for necessary commodities. An additional 50 million people are expected to fall below $1.90 a day, the threshold for absolute poverty set up by the World Bank.
When taking into account the expanded poverty lines of $3.20 and $5.50 for lower-middle and upper-middle-income countries, more than 71 million more people could be facing unprecedented personal hardships around the world. The risk of more people becoming extremely poor is most prevalent in Sub-Saharan Africa, with outliers in other regions like Iraq, Indonesia, Pakistan, Colombia or Turkey.
In Africa, this impending crisis is mostly exacerbated by an increase in grain and fertilizer prices, a development Russian embassy officials around the continent blame on sanctions by the West, even though the trade with agricultural products is currently not sanctioned. According to Western officials, a more likely cause is the blockade of Ukrainian ports by Russia, with the head of the United Nations World Food Program, David Beasley, framing this tactic as a "declaration of war" on global food security as cited by Bloomberg.
To combat this development, the UNDP suggests targeted financial aid instead of blanket subsidies in the food and energy sectors. While the latter would only reduce the number of new poor by one fifth according to UNDP modeling, specific aids would cancel out the additional number of poor people and also reduce the number of people living below all poverty lines in general. Overall, 650 million people were estimated to live in absolute poverty according to data by World Bank.
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