IMF chief Kristalina Georgieva is worried that the burden on developing countries (who face the brunt of the food crisis) will increase as central banks hike interest rates.
“For many countries, 2020 was the year of increased debt and that particularly applies for low-income countries where today 60% of them are either at debt distress or next to it. With high interest rates, the conditions would be very difficult.
“What we also face is significant increase of commodity prices, mostly because of the war in Ukraine. And that is terrible when it comes down to price of food for poor people and especially poor people in poor countries.
“And last but not least, we need to recognize that the Chinese economy has slowed down mostly because of lockdowns related to the pandemic. And the slowdown of growth in China has negative impact on the region and on the world.
“And that adds to the downside risks for 2022. We must stay focused on overcoming the root causes for these problems. And of course, on the top of the list is to strive for peace in Ukraine.”
South Korea will issue a call this week at the World Economic Forum for COVID-19 vaccines and other medical help for North Korea, as its Covid-19 outbreak continues.
According to a senior official, that could mean exemptions from U.N. sanctions imposed over its nuclear programme, according to a senior official.
Reuters has the details:
Secretive North Korea went for more than two years insisting it had no COVID but it confirmed its first outbreak nearly two weeks ago. It has since reported some 2.95 million people showing fever symptoms – it has limited testing capacity for COVID – and 68 deaths, and has imposed a sweeping lockdown and other anti-virus measures.
“Sending vaccines is a priority as the vaccination rate is believed to be near zero in the North,” Na Kyung-won, a special envoy of the South Korean president, told Reuters shortly before leaving for the forum in Davos, Switzerland, where she will lead South Korea’s delegation.
Na said she would discuss help for North Korea with Peter Maurer, president of the International Committee of the Red Cross (ICRC), and Seth Berkley, chief executive of Gavi, the global vaccine alliance that operates a vaccine-sharing programme, as well as other political and economic leaders.
“If direct support is not doable, we can participate in projects run by international organisations like the ICRC. We’ll take a pragmatic approach,” she said.
Na said she aimed to build support for temporary U.N. sanctions exemptions to allow the shipment of fuel and generators to North Korean to facilitate vaccine storage.
More key points from the global tax system panel:
European Central Bank President Christine Lagarde has told Bloomberg TV in Davos that the eurozone has reached a “turning point” in monetary policy, as it prepares to leave negative interest rates behind.
Confirming her blog post yesterday, Lagarde says that the ECB is likely to exit negative interest rates by the end of the third quarter, with a first interest-rate increase set to happen in July.
Lagarde insisted that:
We not in a panic mode.
Lagarde also pushed back against the ides that the eurozone is heading into recession, saying:
“We don’t have that as a baseline.”
[the word on the floor here, though, is that Europe could be heading into recession, especially if a ban on Russian energy is agreed].
Oxfam is pushing its case for a wealth tax on billionaires, warning Davos that record-high global food prices are sparking social and political upheaval, and risk pushing millions into poverty.
Gabriela Bucher, Executive Director of Oxfam International, is speaking on a panel on reforming the global tax system.
She says one person is dying of hunger every 48 seconds in Ethiopia, Kenya and Somalia, where a drought is raging in the Horn of Africa. And
This is only the beginning, Bucher says, and the world is not raising enough money to help.
The hunger crisis is growing. We really need to move, and mobilise resources, Bucher explains, and even a small percentage increase in tax rates on millionaires would make a big difference.
Billionaires are profiting from pain, she adds, and the amounts being accumulated by the richest cannot be used in several lifetimes.
And on the global deal on minimum tax rates, Mathias Cormann, secretary general of the OECD, says he’s hopeful and optimistic Europe will implement the Pillar Two model rules (for domestic implementation of a 15% global minimum tax on multinationals).
Geopolitical rivalvies are also dominating attentions.
Professor Adam Tooze of Columbia University in NYC said he was worried about China, because there didn’t seem to be an “off ramp” from Beijing’s zero lockdown policy.
Tooze, though, is even more concerned about the Cold War turning hot, as the Russia-Ukraine war continues.
“The nuclear escalation risk has not been priced in” Tooze tells us, as he considered what Vladimir Putin might do next.
Politicians in the US, he said, were aiming to deprive Russia of the ability to pursue independent military action, something that it hadn’t done in the years between the end of the Second World War and the collapse of communism.
“This doesn’t feel like the Cold War”.
Tooze said he was not sure how NATO would respond to a Russian use of tactical nuclear weapons but was certain of one thing: it would lead to a monumental global financial crash.
Good morning from Davos.
Worries over a worsening food crisis and an economic downturn are looming over the second day of the World Economic Forum.
The supply disruption caused by the war in Ukraine, with Black Sea ports blockaded, is driving up prices, creating shortages and the risk of famine.
Achim Steiner, the administrator of the UN Development Programme (UNDP), tells us that the world is not prepared for what’s ahead:
“We are in trouble. The war in Ukraine is dramatic in so many ways. There is an acute crisis in food, fuel and finance. As of today there is no reason to believe this is a short term challenge.
We are in the middle of a series of unfolding crises and the world is not prepared for it.
Hunger, Steiner said, was probably the one thing that got people on the streets because once people found they couldn’t afford to feed their families they lost faith in government.
“What we saw in Sri Lanka we are likely to see in more and more countries.”
Steiner said 200 million people were facing acute hunger, double the figure of five years ago. “This is very serious”, he said.
Higher energy prices – another consequence of the Ukraine war – were causing balance of payments problems for many developing countries.
“Wealthier nations have a decision to make. Are they going to step up or do they let things drift on.”
Yesterday, IMF chief Kristalina Georgieva warned that anxiety around access to food at reasonable prices is “hitting the roof” around the world.
David Beasley, head of the UN World Food Programme, warns there is a ‘devastating hunger crisis’ looming, with millions on the brink of famine.
Ursula Von Der Leyen, president of the European Commission, and Jens Stoltenberg, Secretary-General of NATO, are both giving keynote speeches today, in another busy day.
The programme’s here, and here’s a selection:
- 8.45am Davos (7.45am BST): Reimagining the global tax system, with Gabriela Bucher of Oxfam, Stefanie Stantcheva, Professor of Economics at Harvard University, Mathias Cormann of the OECD
- 10am Davos (9am BST): Special address by Spanish PM Pedro Sanchez
- 10.45am Davos (9.45am BST): The geopolitical outlook, with Hina Rabbani Khar, Pakistan’s Minister of State for Foreign Affairs, Andrzej Duda, President of Poland, Gregory W. Meeks, Congressman from New York, José Manuel Albares Bueno, Minister of Foreign Affairs for Spain, H.H. Prince Faisal bin Farhan Al Saud, Minister of Foreign Affairs ofSaudi Arabia, Pekka Haavisto, Minister for Foreign Affairs of Finland
- 11am Davos (10am BST): Special address by Ursula Von Der Leyen, president of the European Commission
- 11.15am Davos (10.15am BST): Panel on Hybrid working, what happens next?
- 11.30am Davos: Special Address by Jens Stoltenberg, Secretary-General of NATO
- 11.45am Davos (10.45am BST): Speeding up road to net zero with Fatih Birol of IEA, John Kerry, Catherine MacGregor, Frans Timmermans.
- 2.30pm Davos (1.30pm BST): How to tackle the cost of living crisis
- 3pm Davos (2pm BST): Energy Security and the European Green Deal, including Pedro Sánchez, Anna Borg, CEO Vattenfall, Frans Timmermans, executive Vice-President for the European Green Deal, European Commission, Ester Baiget, CEO Novozymes, Gitanas Nausėda, President of Lithuania
- 3.30pm Davos (2.30pm BST): A Conversation with Satya Nadella, CEO of Microsoft
- 4.30pm Davos (3.30pm BST): Securing Europe, with Andriy Yermak, Head of the Presidential Administration of Ukraine, Belgium’s prime minister Alexander De Croo, Prime Minister of Belgium, Stevo Pendarovski, President of North Macedonia, Kajsa Ollongren, Minister of Defence of the Netherlands, Jens Stoltenberg Secretary-General of NATO
- 5.30pm Davos (4.30pm BST): Preparing for next pandemic, including Bill Gates, Peter Sands, executive director of The Global Fund To Fight Aids, Tuberculosis & Malaria, Francis deSouza, CEO of Illumina, Helen E. Clark of WHO, Paul Kagame, President of Rwanda