Top economists warn of looming crisis

Food prices have risen an estimated 37 percent year-on-year, according to the World Bank, leaving the planet on the precipice of a nutrition and food security crisis.

World Bank Group President David Malpass said the conflict in Ukraine has caused a near-term spike in prices of key food staples, including wheat and wheat substitutes, meanwhile future harvests and crop yields face reductions due to higher energy and fertilizer prices.

The World Bank food price index recently reached an all-time high, rising 11.5 percent in March, a year-on-year increase of 37 percent. Fertilizer prices also surged in March, up nearly 20 percent since January. Prior to the Russia-Ukraine conflict, food prices were already at a 10-year high, according to the index.

Malpass said the impact will be felt most keenly by low-income households, where a higher proportion of earnings is spent on food. In the developing world, a typical poor family spends about two-thirds of its income on food, and the World Bank estimates that for each 1 percent increase in food prices, 10 million people are thrown into extreme poverty.

"The tragedy unfolding in Ukraine must not be compounded with another tragedy－a global food crisis," said Malpass, who was speaking during an online event on food security hosted by the United States Department of the Treasury. "To prevent it requires speed, supply enhancement, market access, and close coordination."

A report from the World Bank in March estimated that the number of undernourished people around the world could increase from 5 million to 13 million next year. The report said the majority of these increases will occur in the Asia-Pacific and sub-Saharan Africa regions, as well as the Near East and North Africa.

During the event, International Monetary Fund, or IMF, Managing Director Kristalina Georgieva said the conflict has "created a crisis on top of a crisis" with "devastating human costs and a massive setback for the global economy".

The IMF World Economic Outlook projects that global growth will slow to 3.6 percent in 2022, from 6.1 percent in 2021. The IMF has downgraded forecasts for 143 countries, representing 86 percent of global gross domestic product.

IMF Chief Economist Pierre-Olivier Gourinchas said the increase in global food and fuel prices is likely to "intensify commodity hoarding, export controls, and domestic restrictions" which in turn will lead to "supply disruptions … and social unrest".

Malpass said the World Bank is preparing a financial support package in response to both global food insecurity and the crisis in Ukraine. The package will be in the range of $50 billion for the current quarter of 2022 and should reach $170 billion by the middle of next year, he added.

Georgieva called for "urgent" and "well-coordinated" action from the international community. In particular, she called on major creditors to enter into debt restructuring with those nations that are battling both inflation and debt distress.