Global Recession Reverses 20-Year Trend of Decreasing Poverty
Posted on December 24, 2008 by Leah Hazard
The current global recession will undo a 20-year trend of fewer and fewer people living in abject poverty, according to the World Bank's Year in Review 2008 report. The reversal is due to high food costs and sluggish growth, which has caused the poverty rate to increase by about 1.5 percent this year in urban parts of East Asia, South Asia, the Middle East and sub-Saharan Africa.
Forecasts indicate that strong growth may return to some developing countries by 2010, but not quickly enough for the millions currently hungry and unemployed.
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Benefits of lower food and energy prices
I have seen many articles and studies based on research done with energy, food, and commodities prices were very high last summer. But through the fall, food, energy, and commodity prices have fallen like a rock. This must be good news for poor people around the world whose distribution networks for both consumption and production rely on imported oil. Much lower food prices are bad news for big agribusinesses, but not so bad for local farmers who have reasonably focused on fruit, vegetables and other products for local consumption (thus avoiding aid-subsidized imported corn, wheat, etc).
Not all are seeing lower prices
Hi Greg, all,
Would that it were that simple, and falling prices were reaching those in need! Unfortunately, the problem is that a variety of forces are keeping food prices from falling in developing countries, as they have in the U.S. and elsewhere. First, food prices reached record highs for a range of complex reasons this year, and likewise, many of these factors are keeping them high in the developing world:
One reason for the record rise of food prices this year has been the growth of the biofuels industry, which has placed increased demand on grain crops. Although other prices are falling, corn prices are forecast to remain at record highs throughout 2009. (The FAO estimates that one fill of a 4x4's tank uses enough grain to feed one person for a year.)
In addition, as part of the global financial recession, small countries' currencies have been depreciating against the dollar -- in which international prices are set -- and this has left food, locally, at record high prices. So, while global prices fall, the cost to the consumer at his or her neighborhood market, in local currency, has hardly budged.
Paradoxically, as food prices fall, it is looking like North American and European farmers will be planting less in 2009 -- which means that, even if the financial crisis has eased up, we may see a shortage on the global market that prolongs these high prices.
There's an excellent article, of which my comments are essentially a quick summary, on the global impact of this financial crisis on food security here: http://www.independent.co.uk/news/world/politics/year-of-the-hungry-1000...
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