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World Bank economist: The poorest are getting poorer globally
It’s a staggering statistic and a marked setback from the years before the COVID-19 pandemic—the world’s poorest countries are falling further behind, and the wealth gap between the least and most developed nations is growing. One in three of these countries is poorer today than in 2019.
Ayhan Kose, World Bank Group’s Deputy Chief Economist, said that the combined shocks of multiple crises, including the pandemic, wars in Ukraine and the Middle East, food insecurity, and inflation, have taken a massive toll on the 75 least developed economies.
Kose spoke to GZERO’s Tony Maciulis as the annual Spring Meetings of the World Bank and the International Monetary Fund were underway this week in Washington, DC.
“When the food price goes up, the price of oil goes up. That has significant implications for these economies,” he told GZERO. “Where we are now, when you look at 2020-24, they registered the weakest growth rate on average since the 1990s.”
In many ways, the global economic outlook presented this week tells a tale of two post-pandemic realities. Kose explained that the most developed nations, particularly the US, showed greater resilience than expected early in 2023, and the threat of recession has been kept at bay. However, the negative impacts on poor countries, many of which are in Sub-Saharan Africa, cannot be ignored and could lead to greater geopolitical risk and humanitarian emergencies.
This week, World Bank leaders are calling for a renewed commitment to the International Development Association (IDA), which provides zero-interest loans and grants to nations most in need. Kose said the risk associated with crippling sovereign debt has caused some private sector funding to dry up and that politics and protectionism are impacting how wealthier nations approach funding.
But he also pointed to enormous opportunity in nations that are IDA-funded, including a younger population that could serve as a future global workforce and rich natural resources.
With proper investment and funding, he explained, other developing countries have been lifted to find sustained growth.
“At the end of the day history is full of examples. China, India, Indonesia, Chile, (South) Korea. They all used to be IDA borrowers. They were poorer countries. They became much richer.”
For more of our 2024 IMF/World Bank Spring Meetings coverage, visit Glogal Stage.
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Ukraine grain farm
This year, the world held the line against hunger. Next year looks harder.
The worst fears of a global food crisis in 2023 did not come to pass, but the outlook for 2024 is grainy at best.
First, the good news. Although more than a quarter billion people in 53 countries faced acute food insecurity in 2023, that number held steady since 2022. Even the collapse of the Black Sea grain export deal – which enabled Ukrainian grain exports to get through a Russian naval blockade – didn’t cause prices to soar. In fact, the International Grain Council’s benchmark grains and oilseeds price index is down nearly 9% since the deal collapsed on July 23.
That’s partly because higher prices at the beginning of 2023 incentivized farmers all over the world to do what they do best and grow more food. With prices for fertilizer and shipping coming down from post-pandemic highs, and some cooperative weather in South America, the world saw bumper harvests that helped rebalance the market.
But 2024 could be different. The fall and winter have been unseasonably dry in Asia thanks to the El Niño weather pattern, which is expected to continue depressing rainfall for several months. That will crimp production of rice, which nearly half the world depends on. India, which normally accounts for around 40% of global rice exports, has already imposed export restrictions in order to keep prices lower at home.
At the same time, a sluggish global economic picture is eating aid budgets worldwide, with the Food and Agriculture Organization requesting $1.8 billion in donations to finance its efforts to support 43 million subsistence farmers around the world.
And supply of food is only one part of the picture when it comes to hunger crises. The UN identified violence and conflict as a key driver of hunger in 12 countries and territories home to over 430 million people, including Gaza, Sudan and Mali.Graphic Truth: Food insecurity and poverty in the US & Canada
Poverty and food insecurity, exacerbated by COVID and the soaring cost of living, plague both the US and Canada. At the height of the pandemic, school closures in the US deprived many children of their vital food source: free school lunches. This, coupled with job losses and inflation, plunged many into food insecurity. The economic outlook has still not improved for these families, thanks to the high rate of inflation, which is keeping grocery and gas prices elevated.
In Canada, a cost-of-living crisis has seen demand for food banks surge, with the 2023 Hunger Count by Food Banks Canada revealing a 32% rise in year-on-year visits in 2022. Parents made up the largest share of food bank users. Like in the US, they are grappling with exorbitant housing, food, and fuel costs, compounded by childcare expenses. A record 1.9 million Canadians sought assistance from food banks in just March 2023 alone.
How has US food insecurity increased, but not poverty? The poverty line, defined by Lyndon B. Johnson in 1963, hasn't been reassessed since. Back then, poverty was defined as anyone spending a third of their income on a “bare essentials diet.” But thanks to globalization and agricultural advances, an average American now spends only one-eighth of their income on food.
Instead, housing and childcare are the biggest budget busters. An American renter making $30,000 likely allocates over half their income to housing and may struggle with food insecurity. But, given the 1960s “poverty” guidelines, they need to earn nearly three times less, or $12,880, to be considered poor.
Ian Explains: Why is Russia trying to starve the world?
Why is Russia trying to starve the world?
Nearly a year-and-a-half into its invasion of Ukraine—after the massacre of civilians in the Kyiv suburb of Bucha, after the indiscriminate shelling of Europe’s largest nuclear plant in Zaporizhzhia, and after the torture of countless Ukrainian POWs—Moscow’s latest move may be its cruelest so far.
In July, Russia pulled out of a landmark wartime deal, brokered by Turkey and the United Nations, that had allowed for 33 million tons of food to flow from Ukraine to countries in Africa, the Middle East and Asia. And soon after announcing their withdrawal from the Black Sea Grain Initiative, Russian forces engaged in strikes against the port of Odessa, destroying substantial grain stocks while also inadvertently damaging the Chinese consulate there (oops).
So why is it in Moscow’s interest to spike global food prices? What does it have to gain from exacerbating hunger in the Global South? Many of the African nations likely to be hardest hit, like Ethiopia, have taken pains to remain neutral in the Ukraine war.
Maybe Putin is losing patience.
For more on the Russia Ukraine war, watch the upcoming episode of GZERO World with Ian Bremmer on US public television and at gzeromedia.com/gzeroworld.
A collage depicting food price increases.
Are high food prices here to stay?
A perfect storm of pandemic shortages, Russia’s invasion of Ukraine, and extreme weather events have driven up food prices and threatened food security globally. Now, a strong El Niño event stretching into 2024 could exacerbate this food crisis, but not for everyone.
A 2023 report by the UN Food and Agriculture Organization found that as many as 783 million people worldwide faced food insecurity in 2022 – 122 million more than in 2019. The pandemic brought supply chain challenges that have been slow to abate. Extreme weather and global conflict further drove up hunger by limiting access to food. The problem is acute in the developing world, but it’s hitting people hard in North America, too.
Faint hope but gathering despair
Recent weeks have brought better news about food inflation in the US and Canada, with signs that it’s beginning to cool. In June, the Biden administration’s Council of Economic Advisers pointed out that it was slowing after a long period of elevated growth, driven largely by declining egg and fruit prices. They cautioned, however, that prices would remain above pre-pandemic levels throughout 2023.
North of the border, the Royal Bank of Canada found the same: Prices rose 18% in two years, and the rate of growth is slowing though prices are unlikely to come down. A fifth of Canadians, nearly 7 million people, lived in a food-insecure household in 2022. In the US, a study by the Urban Institute found that in 2022, a quarter of Americans reported being food insecure – a whopping 83 million people.
Peter Ceretti, director of Global Macro Geo Strategy at Eurasia Group, echoes the numbers from the Biden administration and RBC. “Consumers are seeing food price inflation begin to cool in the US and Canada, which is a good thing, but I don’t think that food price levels are likely to fall economy-wide in the near future,” he says.
Experts in the United States and Canada are already warning that changing weather will continue to drive up food prices as it delays or kills crops. And that’s not all. “In addition to putting upward pressure on prices,” Ceretti notes, “climate change introduces more uncertainty into weather patterns and growing conditions, which can increase volatility in food costs, too.”
The El Niño factor
What exactly do climate change and El Niño, the warming in the Pacific that impacts weather worldwide, bring to the table? Writing in The Conversation, David Ubilava, associate professor of economics at the University of Sydney, argues that El Niño will not have a significant aggregate effect on food prices at the global level. Instead, while the aberrant weather induces some crop failures (palm oil in Indonesia and Malaysia), it could lead to better harvests for others (in the Horn of Africa). The effects, however, will not be borne equally and could produce famine and conflict.
US Special Envoy for Global Food Security Cary Fowler has highlighted Southeast Asia, Central America, and southern Africa as particularly at-risk areas from El Niño. Meanwhile, Peru’s higher-than-normal water temperatures threaten its fishing industry.
With El Niño arriving and climate change threatening food security, the US and Canada are being asked to do more to support food aid. The Biden administration has launched the Vision for Adapted Crops and Soils. With an initial pledge of $100 million, the program is currently focused on Africa and developing resilient crops in the face of climate change. Last year, Canada announced CA$250 million in food aid, blaming Russia for soaring prices, but cut foreign aid by 15% – a projected CA$1.3 billion – in its 2023 budget.
Climate change is the game changer – and it comes with conflict
Even if El Niño spares some, climate change combined with its attendant crises, such as geopolitical instability and conflict, threatens us all. The Russian invasion of Ukraine, Europe’s breadbasket, has shown what can happen when conflict converges with extreme weather events.
Long term, the effect won’t be pretty. “Global food demand will increase by more than 50% in 2050, but due to climate change, agriculture yields of major crops could decrease over that same period,” according to Secretary of State Anthony Blinken.
Global food producers are already producing relatively smaller yields than in recent decades, says Canada’s largest farmland owner Robert Andjelic. This won’t be helped by the weather this summer, with the hottest month in recorded history – July – and wildfires that ravaged Canada and the US. In recent days, sea temperatures in Florida broke records – hitting 101 degrees Fahrenheit. El Niño or no El Niño, extreme temperatures, and weather events are going to hurt crops and affect food prices and security.
Andjelic issued a stark warning that he expects high food prices to become the new normal when he spoke recently with The Toronto Star. “What I’m going to say is not going to be very well received by the consumer, because I see prices going much higher. This is not just in Canada. It is a worldwide supply and demand issue.”
Trade under pressure
Crop failures could also shape trade and international relations. Canada, for instance, relies on the US and Mexico for much of its produce imports. Last year, the USDA said the US was on track to become a net food importer. Canada became a net exporter in 2019 – but remains a top importer of US agricultural exports, while the US scoops up nearly 60% of Canadian agricultural exports.
Both countries, however, can feed themselves and have plenty of arable land to do so. Ceretti says deep integration and interdependence and (mostly) tariff-free exchange between the US and Canada means that while “there may be disruptions or trade imbalances that emerge in certain food products, generally, I think that trade relations will remain strong.”
But both Canada and the US rely on Caribbean, Central American, and South American states for certain commodities. Consumers may soon face higher prices for coffee and chocolate as futures in sugar, cocoa, and robusta coffee are through the roof, with the latter hitting an all-time high.
Ceretti warns that food security concerns can lead to potential export restrictions, “which can shock global food prices and make it difficult for net food importing countries to buy sufficient supplies at prices they can afford.”
Political risks abound, too
High food prices and insecurity also pose a political risk to incumbents. The 2024 US presidential race is taking shape, and in Canada, PM Justin Trudeau is due to face the electorate by October 2025.
The cost of food and other goods will factor into the US and Canadian elections, putting pressure on Biden and Trudeau to act. But with climate change running unchecked, persistent global geopolitical instability, and potentially greater and more unpredictable El Niño and other weather events in the future, just about every politician is going to face these pressures for the foreseeable future.
Linda Thomas-Greenfield on Russia, Sudan & the power of diplomacy
Can diplomacy solve the world’s most urgent crises?
GZERO World travels to UN headquarters in New York for a special conversation with US Ambassador to the UN Linda Thomas-Greenfield ahead of the United States taking over the presidency of the Security Council for the month of August.
The United States has a lot of priorities for the session, including food security, human rights, and Russia’s ongoing invasion of Ukraine. But with Russia a permanent, veto-wielding member of one of the world’s most powerful diplomatic bodies, how much can really get done?
“What Russia is doing undermines everything that the UN stands for,” Thomas-Greenfield told Bremmer in an interview with Ian Bremmer from the floor of the Security Council chamber. “They are undermining the work of this council by carrying out this unprovoked war on Ukraine.”
Thomas-Greenfield spoke with Bremmer about the contentious relationship with Russia, worries about the world’s food supply after the collapse of the Black Sea grain deal, and the urgency of addressing the ongoing humanitarian crisis in Sudan.
Can the countries of the world put aside their differences and competing interests to effectively deal with the most pressing international security challenges? And what else does the US hope to accomplish during its Council presidency in August?
Watch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
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As Sudan war worsens, Ambassador Linda Thomas-Greenfield says UN must help
On August 1, the United States will take over the presidency of the UN Security Council.
Ian Bremmer sat down with US Ambassador to the UN Linda Thomas-Greenfield at the UN headquarters in New York to find out what’s on the US agenda for the council presidency next month.
High on the list is addressing issues of food insecurity, human rights violations, and calling out Russia for their ongoing war in Ukraine. But Thomas-Greenfield is also concerned about another global conflict that isn’t getting nearly the same amount of attention: the war in Sudan.
On July 23, the Sudan conflict entered its 100th day. The war is waging a devastating human toll, reigniting ethnic violence and increasing concerns the country is descending into a “full-scale civil war.” On April 15, tensions between the Sudanese army and the paramilitary Rapid Support Forces erupted into armed conflict, turning Khartoum and surrounding areas into a war zone. More than 3 million people have been displaced from their homes, including 700,000 refugees who’ve fled to nearby countries. The health ministry reports that some 1,136 people have been killed, though the true number is believed to be much higher.
Ambassador Thomas-Greenfield says that maintaining peace and security around the globe is a fundamental responsibility of the Security Council. While the war in Ukraine is certainly a priority, the war in Sudan must also be on the agenda.
“The people in Sudan want to hear from the Security Council that we have not forgotten them, that we care about the human rights violations that are being committed,” Thomas-Greenfield told Bremmer. “They need to hear the world has not turned their backs on what is happening in their country.”
Watch the upcoming full interview on GZERO World with Ian Bremmer on gzeromedia.com/gzeroworld and on US public television. Check local listings.
Wade Brennan from Sarasota County Mosquito Management Services shows a mosquito that is capable of harboring malaria
Hard Numbers: Malaria makes moves in the US, Kramatorsk death toll, Britons go hungry, Brazil notches 19th century growth number, Israel’s politics crimp tech funding
20: The CDC has detected the first locally transmitted cases of malaria in the US in 20 years. Four of the cases were in Florida, the fifth in Texas. Aren’t those genetically modified mosquitos supposed to be preventing this? THEY HAD ONE JOB!
11: The death toll has climbed to 11 after Russia struck a patron-filled restaurant in the Ukrainian city of Kramatorsk on Tuesday. More than 60 people were injured in the blast. Meanwhile, Ukrainian officials have arrested a local resident who they say fed the Russians information in the lead-up to the strike.
1 in 7: These days a whole lot of Britons don’t have enough to eat. A new study reveals that 1 in 7 people in the UK faced hunger last year because they didn’t have enough money to buy food. That’s more than 11 million people. The UK, which is the world’s sixth largest economy, has recently seen its worst food price inflation since the 1970s.
0.52: Brazil’s population grew an average of 0.52% per year between 2010 and 2022, according to new census figures. That’s the slowest clip for Latin America’s most populous nation since 1872. Brazil’s birth rates have been steadily declining since the 1960s as the country industrialized. For comparison, the US population grew just 0.4% in 2022.
65: Fundraising by Israel’s world-renowned tech sector plummeted by 65% in the second quarter of 2023 as political upheaval over PM Bibi Netanyahu’s court reform plans spooked investors. For a look at the tech sector’s outsized role in that story, see our piece here.