Bloomberg News, AP
WASHINGTON—World Bank president Robert Zoellick said on Saturday the global economy is “one shock away” from a crisis in food supplies and prices.
Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent last year, the second-steepest increase since at least 1991, and surged to a record in February.
Food price inflation is “the biggest threat today to the world’s poor,” Zoellick said at a press conference following meetings of the World Bank and the International Monetary Fund (IMF). “We are one shock away from a full-blown crisis.”
“For most commodities, stocks are relatively low,” he said. “You have one other weather event in some of these areas and you really take a danger zone and start to push people over the edge.”
Zoellick said he opposes export bans that nations use to depress local commodity prices for their citizens, lifting costs for consumers in other countries.
Farmers in Russia, once the second-biggest wheat exporter, are planting the fewest acres in four years, in part because a government export ban kept prices low, a Bloomberg survey of producers, traders and analysts showed last month. India, the largest grower after China, is mulling lifting an export ban in place since 2007 as harvests may reach a record for a fourth straight year, Agriculture Minister Sharad Pawar said this month.
Economic growth “is leveling off after a postcrisis recovery,” Zoellick said. “The question now is whether it’s strong enough to reduce unemployment, particularly in developed countries. Inflation is up in developing countries, and this could lead to overheating or asset price bubbles.”
Meanwhile, global finance ministers and central bankers concluded three days of talks late on Saturday with pledges of greater cooperation to avert another financial crisis, leaving uncertain how far they would go in changing their domestic policies in response to international pressures.
Singapore Finance Minister Tharman Shanmugaratnam, head of the IMF’s steering panel, said at a concluding news conference that all countries realized the importance of policy reform and better coordination as the global economy recovers from the economic downturn.
“Although we are in a better position than a year ago, there are significant vulnerabilities,” he told reporters. “We are still in a fragile situation. We have to be extremely watchful.”
(Bloomberg News, AP)
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