UNDP warns of rising global poverty risk from energy and food price shocks

The United Nations Development Programme (UNDP) warns that the global economy is facing a potential new wave of poverty driven by rising energy and food prices. Conflicts in the Middle East have contributed to significant increases in fuel costs, with gasoline prices rising by an average of 26 percent and diesel by 38 percent across 130 countries since the onset of recent conflicts.

If these price shocks are fully passed on to consumers, the UNDP estimates that 130 million people could fall into poverty living on less than $6.85 a day, 121 million on less than $3.65, and 66 million on less than $2.15. These figures represent potential outcomes rather than current realized statistics.

To mitigate these impacts, governments are utilizing subsidies, but high global interest rates and rising debt burdens are limiting the fiscal space for developing nations. The cost of direct fossil fuel subsidies worldwide is projected to exceed $1 trillion this year. Additionally, the UNDP notes that the most severe impacts of the crisis may not yet have been fully realized, with potential further risks from El Niño affecting food supplies.