Bank

World Bank warns inflation could lead to protests and riots

Soaring energy and food prices triggered by Russia’s invasion of Ukraine could exacerbate existing food security concerns in the Middle East and Africa and fuel growing social unrest, said World Bank Chief Economist Carmen Reinhart. Germany will host a virtual meeting of agriculture ministers from the Group of Seven (G7) advanced economies on Friday to discuss the impact of the invasion amid growing concerns about stabilizing food markets.

“There will be significant ramifications for the Middle East, for Africa, North Africa and sub-Saharan Africa, in particular,” which was already experiencing food insecurity, Reinhart told Reuters in an interview.

“I don’t want to be melodramatic, but it’s not far that food insecurity and riots were part of the story behind the Arab Spring,” she said, adding that the coups successes and failures had increased over the past two years.

The Arab Spring refers to a series of pro-democracy protests and uprisings that took place in the Middle East and North Africa starting in 2010, beginning in Tunisia and spreading to five other countries: Libya, Egypt, Yemen, Syria and Bahrain.

Sudden spikes in food prices can lead to social unrest, as happened in 2007-2008 and again in 2011, when global food price increases were associated with riots in more than 40 countries.

Agricultural commodities were already up 35% in January compared to a year ago, and are expected to increase further due to the war since Russia and Ukraine are both major exporters of wheat, corn, barley and sunflower oil, the World Bank reported last month. , a few days after the start of the Russian invasion.

Moscow calls its actions in Ukraine a “special operation”.

Experts say soaring energy and food prices could also push policymakers to implement more subsidies, which would add to the debt load of many low-income countries, some 60 of which are already over-indebted or close to over-indebtedness.

The bank warned last month that the impacts could be particularly harsh in the Middle East and North Africa, where countries like Egypt import up to 80% of their wheat from Ukraine and Russia. Mozambique is also a major importer of wheat and oil.

Reinhart said Central Asian countries also face significant economic challenges, given their close economic and trade ties with Russia, which the International Monetary Fund expects to tip into recession this year following the Western sanctions.

“It’s hit their currencies, and there are already signs of bank runs, trust issues, coupled with food insecurity and (drop in) remittances,” she said, alluding to potential refugee flows as an added complication.

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