The world, after getting battered by the pandemic, supply chain chokeholds and leaps in prices, is now faced with the worst human and economic catastrophe due to uncalled for Russia-Ukraine war.
This war is a major humanitarian crisis affecting millions of people and a severe shock to sustained economic development of the world, according to the editorial of the current News Bulletin (April-June' 2022) of International Chamber of Commerce-Bangladesh (ICCB) that was released on Thursday (7 July).
According to World Food Programme (WFP) some 276 million people are facing acute food insecurity. Food and Agriculture Organization (FAO) estimates that the impact of the war could lead to 11-19 million more hungry people, reads a press release.
The War has compelled more than six million Ukrainians to take refuge in neighbouring countries. This has added to the already existing 26.4 million refuges globally, including some more than one million Rohingyas in Bangladesh.
According to UNHCR at the end of 2020 there were 82.4 million forcibly displaced people in the world, of which more than a quarter (26.4 million) are refugees.
WFP executive director has announced its decision of cutting food rations for refugees by as much as half, as it faces a hunger crisis worsened by war in Ukraine and funding constraints.
Ukraine is the world's biggest producer of sunflower oil, with Russia being number two, according to S&P Global Platts.
The two countries account for 60% of global production. Besides, Ukraine grows enough food to feed 400 million people worldwide, which includes 10% of the worldwide grain supply and 13% of global corn supply.
According to FAO, spiralling costs of farm inputs like fertiliser could deter growers from expanding production and worsen food security in poorer countries facing record import bills. As a result, some countries in the Sub-Saharan Africa and in Asia, such as Bangladesh and Indonesia, also being highly impacted, reads the release.
Oil and natural gas prices rose sharply following the invasion and they are expected to remain elevated this year. The energy supply crunch reminds the world of the 1970's oil crisis that stagnated global growth amid surging inflation.
NATO Secretary General Jens Stoltenberg said that Russia's war in Ukraine could take years. After US military aid in millions of dollars were disbursed and several billions more pledged, European leaders, including the French president and the German chancellor are also offering Ukraine more weapons and European Union's candidate status. Russian President, on the other hand, declared "the end of the era of the unipolar world". All these moves point to the prospects of a prolonged war.
The developed nations are experiencing record inflation in decades and taking tough steps to control spending, which will dampen consumer demand – a concern for Bangladesh that depends on exports to these countries.
The US Federal Reserve has hiked, for the first time in more than two decades, its benchmark interest rates by 0.75%, as it had has no choice but to address inflation more forcefully, regardless of the impact on markets. The Bank for International Settlement (BIS), considered as the Central Bank of Central Banks, in its Annual Economic Report has observed that the central banks must act quickly and decisively before inflation become entrenched, with the thread of stagflation looking over the global economy.
Bangladesh is already facing the effect of Russia-Ukraine war, with inflation reaching 7%, the highest in decades, reduction in exports to Russia and Ukraine as well as rise in import bills, mainly for oil and food.
Countries are preparing for the worse, depending on their immediate and long-term concerns. For the West, it is preeminently a security concern and they are gearing up accordingly, apart from efforts to find alternatives to energy and food supplies.
But for the rest of the world, the humanitarian sufferings and economic concerns come first as the war has disrupted the entire supply chain, making production, business and life unpredictable.
International Chamber of Commerce and its 45 million members in over 100 countries urge upon the super powers to abandon their fight for world supremacy at the cost of loss of millions life, sufferings of humanity and obstacle to continued global growth.