A World Bank report came in April amid the Iran-America war. This report had expressed apprehension that the increasing geo-political tension in West Asia due to the US-Iran War could have a devastating impact on the global energy market as well as the commodity markets. But now despite the end of Iran-America war, this crisis does not seem to be ending.
UNDP, the main global development network of the United Nations, has issued a warning that despite the end of the war between Iran and America, its economic, financial and social impact may persist. Also, a large number of people may become victims of poverty.
Developing countries are paying a financial price
In the month of April, many developing countries tried to protect households and businesses from rising energy prices through subsidies, price caps, tax cuts and demand control measures. But countries are having to pay a heavy financial price for this.
4.5 crore people may fall into poverty
According to UNDP, the main global development network of the United Nations, poverty is expected to increase significantly in the coming years. In a worsening global growth scenario, an additional 17 million people could fall into poverty by upper-middle-income standards. In a serious situation this number can reach 4.5 crores.
These areas will be affected the most
Carbon-based fuel subsidies are estimated to exceed $1 trillion in 2026 and could reach $1.43 trillion if oil prices reach $110 per barrel. The impact of this shock varies across regions. Interruptions in fertilizer supplies in Africa threaten to worsen food insecurity. Financial burden to rise in East Asia, even as energy subsidies keep inflation under control
Weak countries need multilateral cooperation
This situation comes at a time when almost half of the world’s poorest countries are already in debt distress or at high risk of debt crisis. As debt servicing costs increase and financial reserves are depleted, many governments are being forced to divert resources from health, education and infrastructure. Weak countries may need continued multilateral cooperation to deal with the crisis and preserve development achievements.
Fertilizer prices will also increase
In its report, the World Bank has expressed the possibility of a 31 percent increase in fertilizer prices by the end of 2026. Apart from this, suspicion has also been raised that the income of the farmers will decrease and the crop production will be in danger in future. The war between Iran and America may be over, but the already visible effects will continue. The impact on food supply could push 45 million (45 million) people into severe food insecurity this year.
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