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A Perfect Storm for Developing Countries

Interrelated economic and political crises in poorer countries are putting millions of lives at risk, but mitigation is possible. Leading economies must refrain from beggar-thy-neighbor policies and use their combined resources in the IMF and the World Bank to act quickly and unconditionally to avert disaster.

OXFORD – Through no fault of their own, developing countries face a perfect storm of famine, political upheaval, and debt crises. Russia’s invasion of Ukraine and the Western-led sanctions it triggered are partly to blame, as are COVID-19 lockdowns in advanced economies, which deprived poor countries of vital tourism and export revenue.

Millions of lives are now at risk, but mitigation is possible. It should start at this month’s spring meetings of the International Monetary Fund and the World Bank.

Policymakers have much to address – starting with spiraling food prices. The Russia-Ukraine conflict, involving countries that between them supply 29% of the world’s wheat, has contributed to a 67% increase in wheat prices since the beginning of this year. Export bans imposed by other wheat producers are also fueling price increases, as is a fertilizer shortage because of reduced supplies from Belarus and Russia.