The United Nations has warned that the war in Ukraine will have a devastating effect on developing countries, intensifying as the conflict persists.
The warning came in a new report from the UN’s trade, investment, and development agency, UNCTAD.
Dubbed “Tapering a Time of Conflict,” the 33-page document observed that the war in Ukraine had triggered a global economic slowdown.
“The global economy is, literally and metaphorically, staring down the barrel of a gun. Stopping the war in Ukraine, rebuilding its economy, and delivering a lasting peace settlement must be the priorities,” the report asserted.
It explained that two immediate impacts of the war had been exchange-rate instability and surging commodity prices, particularly for food and fuel.
“The added pressure of price increases is intensifying calls for a policy response in advanced economies, including on the fiscal front, threatening a sharper than expected slowdown in growth,” the report said.
According to the document, the danger for many developing countries heavily reliant on food and fuel imports is more profound.
It noted that higher prices threaten livelihoods, discourage investment and raise the spectre of widening trade deficits.
The UN report observed that with elevated debt levels from the COVID-19 pandemic, sudden currency depreciation could quickly make debt service unsustainable and tip some countries into a downward spiral of insolvency, recession, and arrested development.
“Whether this leads to unrest or not, a profound social malaise is already spreading,” it warned.
UNCTAD chief Rebeca Grynspan demanded a coordinated international response to help poorer countries weather the crisis, stressing to journalists that “urgency is of the essence”.
Russia invaded Ukraine on February 24, the most significant conventional military attack on a European state since World War Two.
Ukraine and Russia are among the biggest exporters of farm-grown foodstuffs and fertilisers, notably wheat, maize, rapeseed, sunflower seeds, and sunflower oil.
But Ukraine’s access to its ports has been cut off as the conflict continues.
At the same time, Russia is increasingly isolated from export markets, with its economy the target of international sanctions.
As a result, both countries’ commodities are shrinking fast, spurring surging prices.