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Global Poverty being driven by Food Inflation

Posted by: pjeanty

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pjeanty

Increasing Food prices are causing global inflation and are one prime cause for the current unrest in Middle East. World Bank’s recent report cited that 44 million people have additionally been pushed into poverty owing to historic food prices. Some reports suggest that US’s fiscal stimulus provided lot of liquidity which flew into emerging markets and caused inflation. The stimulus also created a stable dollar which created currency fluctuations globally. There are widespread concerns that food riots might emerge in several countries.  Wheat prices have more than doubled globally.

Countries that import food are facing huge deficits and staring at huge increase in public distribution budgets. Countries are shoring up their food reserves to avoid panic crisis. Speculation and hoarding by profiteers adds to the food price increase.  Climate changes have also caused shortage in food apart from the global trend of shifting from food crops to commercial crops like corn for ethanol production.

Rising food prices has also political ramifications as has been witnessed in Egypt and Tunisia. In Libya, the protests are still ongoing and in India, protestors have taken to the streets urging action against 10 yr high in food prices, this despite food export ban being applied in several countries ranging from India to Russia. The key question being asked globally is whether the common householder can withstand the exponential rise in Oil and Food prices. Already, many economies have been shattered by the recession since 2008. Added to this, the current food inflation crisis has been the last straw on the camel’s back in several countries.


Inflation, Unemployment and Social inequity- a Global Problem

Posted by: pjeanty

Tagged in: Untagged 

pjeanty

From USA to India, countries globally share three issues which are all in a northern trajectory - Inflation, Unemployment and Social Inequity. Rising commodity and food prices are hitting the poor and middle class globally while the gap between the haves and have not’s has been increasing steadily across the globe.

Developed countries are predicted to grow only between 1-5% over the next few years while developing countries are predicted to grow between 5-10%. Still unemployment is a common problem among all the countries. In the developing countries, it is primarily because there has been a generational shift from unskilled labor to skilled labor and migration from rural economies to urban economies, causing stress on the workforce.  In a booming period, there were enough jobs for everyone and hence the transition could be sustained, but recession has caused a strain on this transition. A recent Ipsos/Reuters survey of 18,676 adults in 24 nations in Asia, Africa, Europe and North and South America revealed that only 1 in 3 people globally believe that their country is headed in the right direction.

Surprisingly it is the lack of jobs that is impacting the youth more than corruption or other scandals in most countries.  Reuters forecast 2011 to carry the same concerns that reigned high in 2010.   Recent reports suggest that the borderline countries in Europe might take around 10 years to return to normal growth rates.  The Reuters survey indicated a high level of pessimism among citizens in Italy, Japan, France, Belgium and Spain. The current uprising in Tunisia and the domino effect in other countries is also being attributed to Inflation, growing inequity and unemployment. Stoked by social media, people are seeking a change and freedom from the three factors. Global reports point to a period of high food and commodity prices for some time indicating that inflation will continue for some more time.