May 30, 2023

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Slower growth in most MENA countries in 2023

The economies of the Middle East and North Africa (MENA) region are expected to grow more slowly in 2023 as double-digit food price increases put additional pressure on poor households and food insecurity could affect generations, according to a recent World Bank report. region.

Titled “Destroyed Rules: The Long-Term Consequences of Rising Prices and Food Insecurity in the Middle East and North Africa Region,” the International Finance Corporation predicts a 5.8% decline in regional GDP in 2022 and 3% in 2023.

Oil-exporting countries benefit from oil wealth in 2022, although there is a significant gap between high-income countries and other regions, their growth will be slower.

Real GDP per capita, the best measure of living standards, is expected to decline from 4.4% in 2022 to 1.6% in 2023.
Inflation in the region increased dramatically in 2022, especially in countries with devalued currencies, the report noted.

The paper, which specifically examined the impact of rising food prices on food insecurity, found that 8 of 16 countries reported double-digit inflation or higher, hitting poor households hardest because those CI countries allocate a larger share of their budgets to food. than better families.

“Rising food prices have devastating effects on poor families. Food insecurity can have long-term effects across generations, which will unfortunately limit the opportunities of many young people,” said Ferid Belhaj, World Bank Vice President for the MENA region. .

“The human and economic cost of inactivity is huge, and bold policies are needed in a region where young people make up more than half of the population,” he adds.

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The semi-annual report reveals that average food inflation in 16 MENA economies between March and December 2022 was 29% year-on-year. This was higher than intervention inflation, which averaged 19.4% year-on-year over the same period, compared with 14.8% between October 2021 and February 2022, the month when the war in Ukraine began.

In the four subgroups of the MENA region under the report—oil-importing developing countries, oil-exporting developing countries, countries in conflict, and GCC countries—inflation contributes between 24% and 33% of GDP growth.

“The report estimates that one in five people living in developing countries in the MENA region will suffer from food insecurity this year, and about 8 million children under the age of 5 are part of the group at risk of hunger. Even temporary food price inflation can cause long-term and often irreversible damage,” said the World Bank Head for the MENA Region. Economist Roberta Gatti said.

According to the report, food price increases between March and June 2022 may have increased the risk of child stunting in developing countries by 17% to 24%, representing about 200,000 to 285,000 new-borns.

More generally, studies show that malnutrition in children leads to poor school performance, low income and health problems. Projected funding will cost billions of dollars a year to address acute food insecurity, but the report demonstrates that money alone is not enough.

It therefore proposes measures to help alleviate food insecurity, including cash transfers and cash transfers that can be carried out without delay to prevent food insecurity before it becomes a real crisis.

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The report highlights the need for more up-to-date and better data on children’s health and nutrition status, as well as better access to management information to help target priorities and easily reach vulnerable populations.

Furthermore, it must be concluded that increasing the resilience of food systems and strengthening supply chains is essential, especially in the face of climate shocks and future market disruptions.