World at risk of famine and mass migration as Ukraine war sparks food catastrophe, IMF warns

·3 min read
Farmers use combines to harvest a wheat field near the village Tbilisskaya, Russia - Vitaly Timkiv/ AP
Farmers use combines to harvest a wheat field near the village Tbilisskaya, Russia - Vitaly Timkiv/ AP

Catastrophic wheat shortages risk sending millions to the brink of starvation and setting off a wave of migration as the world’s poor take to the road in search of food, the International Monetary Fund has warned.

The crunch caused by Covid and the Russian invasion of Ukraine risks being compounded by misplaced protectionism as dozens of governments around the world impose restrictions on the trade of essentials including energy and food, the economic watchdog said.

"The costs of further disintegration would be enormous across countries,” the IMF’s managing director, Kristalina Georgieva, and chief economist, Gita Gopinath, wrote in a blogpost.

“And people at every income level would be hurt – from highly-paid professionals and middle-income factory workers who export, to low-paid workers who depend on food imports to survive. More people will embark on perilous journeys to seek opportunity elsewhere."

 Lukashivka ,Chernihiv Oblast. Ukraine. Pic Shows the AE Naporivske farm which was attached by Russian forces during the occupation with some of their cattle being slaughtered and Russian soldiers who were based at the local church taking meat to make kebabs - Paul Grover/Telegraph
Lukashivka ,Chernihiv Oblast. Ukraine. Pic Shows the AE Naporivske farm which was attached by Russian forces during the occupation with some of their cattle being slaughtered and Russian soldiers who were based at the local church taking meat to make kebabs - Paul Grover/Telegraph

They said the world is facing a "confluence of calamities", with government policies in response making the situation worse.

"Tensions over trade, technology standards and security have been growing for many years, undermining growth – and trust in the current global economic system," she added.

"Uncertainty around trade policies alone reduced global gross domestic product in 2019 by nearly 1pc, according to IMF research.

"And since the war in Ukraine started, our monitoring indicates that around 30 countries have restricted trade in food, energy, and other key commodities.”

Re-committing to globalisation is the answer, the pair said, as countries, companies and households will be more secure if they have more varied supply chains which are resilient to economic shocks, rather than cutting links to the rest of the world.

“We can start now by lowering trade barriers to alleviate shortages and lower the prices of food and other products,” they said.

"Not only countries but also companies need to diversify imports - to secure supply chains and preserve the tremendous benefits to business of global integration.

"New IMF research shows that diversification can cut potential GDP losses from supply disruptions in half. Auto manufacturers and others have found that designing products that can use substitutable or more widely available parts can reduce losses by 80pc.”

Their comments come amid mounting concerns that the world could split into two economic blocs, which may put an end to globalisation.

There are fears that China and Russia could create a financial system to rival the West after Russian banks were ejected from the Swift global payments messaging system and China's UnionPay helped the Kremlin after Visa and MasterCard suspended operations in the nation.

Fragmentation also risks creating two different technology standards and reserve currencies, which have the potential to cause a permanent split that could harm global growth.

Ms Georgieva has proposed strengthening the global system by lowering trade barriers, creating new timelines for clearing debt, creating a new worldwide digital payment platform and making a greater effort to tackle climate change.

She added: "Over the past three decades, flows of capital, goods, services, and people have transformed our world, helped by the spread of new technologies and ideas.

"These forces of integration have boosted productivity and living standards, tripling the size of the global economy and lifting 1.3 billion people out of extreme poverty. But the successes of integration have also brought complacency.

"There is no silver bullet to address the most destructive forms of fragmentation," she added. "But by working with all stakeholders on urgent common concerns, we can begin to weave a stronger, more inclusive global economy."

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