ISLAMABAD: Pakistan’s agriculture sector is feared to be negatively impacted due to high prices and shortage of farming inputs, including fertilisers, as of mid-2022, forecasts the ‘World Economic Situation and Prospects’ released by the United Nations.
This situation is likely to persist in South Asia, and will probably result in weaker harvests and exert further upward pressure on food prices in the near term in Pakistan, India, Bangladesh and Sri Lanka. Along with higher energy prices, elevated prices of food will likely increase food insecurity across South Asia, warns the survey released this week.
Reviewing the world economic situation and prospects as of mid-2022, the United Nations Department of Economic and Social Affairs (DESA) in its survey says consumer price inflation in the region is expected to accelerate to 9.5 per cent in 2022, from 8.9pc in 2021.
According to the report, tighter external financial conditions will adversely affect regional growth prospects, especially for countries with high exposure to global capital markets facing debt distress or risks of debt default. The pandemic left many countries with large fiscal deficits and higher and unsustainable levels of public debt.
UN document says elevated prices will likely increase food insecurity across South Asia
The outlook in South Asia has deteriorated in recent months, against the backdrop of ongoing conflict in Ukraine, higher commodity prices and potential negative spillover effects from monetary tightening in the United States.
The regional economic output is projected to expand by 5.5pc in 2022, which is 0.4 percentage points lower than our forecast released in January. India, the largest economy in the region, is expected to grow by 6.4pc in 2022, well below the 8.8pc growth in 2021, as higher inflationary pressures and uneven recovery of the labour market will curb private consumption and investment.
The DESA survey downgrades global growth to 3.1pc in 2022, from the 4pc it had forecast in January. The war in Ukraine has upended the fragile recovery from the Covid-19 pandemic, triggering a devastating humanitarian crisis in Europe, increasing food and commodity prices and exacerbating inflationary pressures worldwide.
Rising geopolitical and economic uncertainties are dampening business confidence, and increasing borrowing costs are weakening investment prospects. The global economy faces major downside risks from further escalation of the war in Ukraine, new waves of the pandemic, and faster-than-expected monetary tightening in developed economies.
The war in Ukraine and the economic sanctions imposed on Russia are exacting heavy tolls not only on the economies of Russia and Ukraine, but also on the entire CIS area and the neighbouring economies, including the European Union. The economy of the European Union is projected to grow by 2.7pc in 2022, marking a sharp downward revision of 1.2pc since the forecast in January.
In developing countries, output is projected to increase by 4.1pc in 2022, against the backdrop of higher energy and food prices, rising inflationary pressures and slower growth in the United States, China and the European Union. The monetary tightening in the United States is also set to increase developing countries’ borrowing costs and worsen financing gaps, it says.
Tighter external financial conditions will adversely affect growth prospects, especially for the countries with high exposure to global capital markets facing debt distress. The outlook is compounded by worsening food insecurity, especially in Africa.
The world economy is facing substantial and more persistent inflationary pressures. Global inflation is projected to increase to 6.7pc in 2022, twice the average of 2.9pc during the past decade.
Published in Dawn, May 22nd, 2022