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Due to the effect of Russia-Ukraine war, many countries of
the world have to spend more to buy food. Many countries are spending more than
1 percent of their gross domestic product (GDP). While some countries are able
to meet this additional cost burden, many countries may fall into debt crisis
as a result. That is, it will not be possible for them to bear that additional
cost.
According to an observation of the World Bank, the price of agricultural products increased by 19 percent on July 29, 2022 compared to January 2021. Maize and wheat prices increased by 16 and 22 percent respectively. The World Bank's updated data on food security shows that in addition to food import inflation, rising fertilizer prices pose another major challenge. The main raw material for fertilizer production is natural gas. Fertilizer production is disrupted due to war-induced increase in natural gas prices. But apart from the effects of war, the situation in some countries is also deteriorating due to internal factors.
The example of Lebanon is given in this context. Two years
ago, an explosion in a food warehouse in the country's capital, Beirut,
destroyed their food storage capacity. In this reality, the country's food
inflation rate has reached 332 percent during March-June this year. At the same
time, the rate of food inflation in the African country Zimbabwe stood at 255
percent, 155 percent in Venezuela and 94 percent in Turkey. The report lists
the extent of food inflation in any country. It also mentions that Bangladesh's
food inflation has exceeded eight percent. However, not only in the developing
world, but also in developed countries, the food inflation rate is increasing.
Data from March to June shows that inflation rate is higher
in almost all low and middle income countries of the world. In many countries
it has reached double digits. High inflation in high-income countries has also
exacerbated this trend. About 79 percent of high-income countries have high
food inflation. But there are also some words of hope. On July 22,
Ukraine-Russia reached an agreement to transport 2 million tons of grain
through the Balkan Sea. This grain transportation has already started. Before
the war, the food grains of this region were regularly exported to Asia, Africa
and Middle East countries. It stopped after the war started.
According to another report titled World Economic Forecast
of the World Bank, the impact of the increase in the price of food products may
last for some time. By the end of this year there will be higher inflationary
effects. This rate will decrease next year. However, it may take time till the
end of 2024 for the situation to return to the pre-corona situation.
|Source: Online/SZK
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