Abdulkarim Baradee is a 33-year-old farmer. The rising prices of fuel, food and agricultural materials have made life hard for families already struggling with poverty in his village. OCHA/Bilal Al-hammoud
Economic hardship persists, increasingly becoming a primary driver of need
Economic dynamics often interact and overlap with conflict, climate shocks, infectious diseases and others, as a significant driver of humanitarian need. However, in recent years, a new trend has emerged, with economic factors becoming either a primary driver, or strong contributor, to rising needs in a number of crises. These crises reflect three different types of contexts: crises where political and economic instability left people in urgent need of assistance, contexts that began as conflicts but have since been overlaid by economic crises and contexts where chronic impoverishment left communities extremely vulnerable and any new shock could push them into humanitarian need. These situations persist within the global landscape – as such, economic hardship, driven by an uncertain global economy, will continue to influence humanitarian need.
The global economy is gradually recovering from the economic slump caused by COVID-19, yet uncertainty persists amid high inflation worldwide, disruption to the financial sector, the ongoing effects of the war in Ukraine and conflicts and the lingering economic impacts of the pandemic. Global economic growth is projected to decline from 3 per cent in 2023 to 2.9 per cent in 2024, well below the historical (2000-2019) average of 3.8 per cent.1 This slowdown could have a significant impact on low and middle-income countries due to their heavy reliance on exports to advanced economies and limiting the ability of the poorest countries to achieve development gains.
Real GDP growth at market prices (%) for 2024 HRP countries
Sub-Saharan Africa continues to be hit hard by rising food and energy prices and other spillovers from the war in Ukraine. Economic growth for the region is expected to slow to 3.3 per cent in 2023 before picking up to 4 per cent in 20242 – making this is the second consecutive year of an aggregate decline in growth for the region3 - adding pressure to those already in need of assistance.
As of October 2023, eleven HRP countries, for which data is available, faced lower than projected GDP growth for 2023 and 2024, compared to predictions made in 2022.4 In Sudan, economic growth is expected to decline by 15.8 per cent due to the outbreak of conflict in mid-April 2023.5Niger (-7.8 per cent), Colombia (-5.9 per cent) and Venezuela (-4.0 per cent) also face significant reductions in economic growth. Lower economic growth in these settings is influenced by compounding factors, such as climate change, new and/or resurging conflict, social unrest, high food and fuel prices and lingering economic effects of the COVID-19 pandemic.
Nyala, South Darfur, Sudan
WFP initiated a Post-Harvest Loss Reduction Programme to mitigate grain loss for small-scale farmers, which can reach up to 3 per cent of their harvest. The program seeks to enhance food accessibility, minimize aflatoxin contamination and empower smallholders to store and sell surplus grains at higher prices.
WFP/Mohamed Elamin
High interest rates and debt sustainability remain a major global concern. For low-income developing countries (LIDCs) the picture remains particularly alarming. Total debt for LIDCs increased by about 0.5 per cent of GDP over the course of 2022,6 with more than half of these countries in or at high risk of debt distress in 2023.7 Humanitarian settings face significant debt risks. Two HRP countries, Sudan and Somalia, are currently in debt distress. An additional eleven are at high risk of debt distress8 and may require timely fiscal consolidation and prompt restructuring of their debts to achieve debt sustainability. LIDCs currently spend 23 per cent of tax revenues on average just to make interest payments.9
Inflation remains high overall, continuing to increase price pressure and erode household purchasing power. Global inflation is forecast to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024. This is attributed to tighter monetary policy aided by lower international commodity prices. Core inflation is projected to decline more gradually and is not expected to return to target until 2025 in most cases.10 In response to high inflation, many central banks have raised interest rates, which has further exacerbated debt vulnerabilities.
Monthly evolution of the Food Price Index (2000 - Oct 2023)
Commodity prices have come down from their historic peak in June 2022, when prices surged due to the war in Ukraine. Despite this, prices of all major commodity groups remain well above their 2015-2019 average levels.11 Global energy and food price hikes in 2022 triggered a cost-of-living crisis in many countries, especially low-income countries, many of which continue to suffer from food insecurity. As of April 2023, nine out of ten low- and middle-income countries face food price inflation above 5 per cent.12 Food prices are expected to fall by 3 per cent in 2024, if grain and oilseed exports from the Black Sea region remain stable.13 Further escalation of the war in Ukraine could trigger a renewed energy crisis in Europe and exacerbate the already alarming food insecurity situation in low-income countries.14
Decades of hard-won development gains in poverty reduction, employment and food security continue to be reversed. At the midpoint of the 2030 Agenda for Sustainable Development, progress is off track.15Employment numbers worldwide are recovering but remained significantly below pre-pandemic rates in 2022 and beyond - disproportionately affecting women and young people.16 Further, the last three years saw a significant increase in the number of people projected to live in extreme poverty. By the end of 2022, as many as 670 million people were estimated to still be living in extreme poverty. Under current trends, the UN estimates that 575 million people will still be living in extreme poverty in 2030, most of them in Sub-Saharan Africa. Only about one third of countries will meet the target to halve national poverty levels.17
United Nations, The Sustainable Development Goals Report 2023 – Special Edition, p. 4; About half of the 140 targets are assessed to be moderately to severely off track, and over 30 per cent have either seen no movement or regressed below the 2015 baseline.
ILO, World Employment and Social Outlook 2023, p.12 Global unemployment is projected to stand at 268 million in people 2023, up from 207 million in 2022, and about 82 million more than in 2019.