Global: Recession still hitting poor countries

from IRIN
Published on 14 Oct 2009
ROME, 14 October 2009 (IRIN) - The 2008/09 economic crisis has hit poor households in developing countries harder than any crisis in recent times, pushing more than a billion people into hunger, said the UN Food and Agriculture Organisation (FAO) in its latest annual report, The State of Food Insecurity in the World.

Somalia, Afghanistan, Ethiopia, Iraq and Eritrea top a list of 16 countries identified as the most vulnerable, all of which have experienced either man-made or natural crises, or both, at least once in the past 10 years.

The financial crisis has been particularly devastating, as it "came on the back of the 2007/08 food price crisis", said David Dawe, technical editor of the report.

"The crisis affected large parts of the world simultaneously, and affected traditional coping mechanisms such as remittance flows, or the possibility of migrating to an unaffected area," he noted.

Remittance flows to developing countries are expected to drop from an estimated US$328 billion in 2008 to $304 billion in 2009, according to the World Bank.

Somalis made destitute by years of conflict have depended on remittance flows, which contributed 71 percent to the country's gross national income in 2006, the World Bank said.

Poor countries are still reeling from the impact of high cereal prices, which doubled at the peak of the food crisis. Although prices have fallen somewhat, in real terms they remain 17 percent higher than two years ago, said the FAO report.

Dawe pointed out that as the recession was still unfolding, it was too early to assess the full extent of its impact. Many countries have experienced an across-the-board drop in trade and financial inflows, reducing employment opportunities and the amount of money available for government programmes.

The FAO report looked at inflows into Latin American economies, which were the worst hit. "The 17 largest Latin American economies, for example, received $184 billion in financial inflows in 2007, which about halved in 2008 to $89 billion, and is expected to halve again to $43 billion in 2009," Dawe said.

Many other countries found themselves in a similar situation, which would affect their capacity to buy food and badly needed medicines and health-care equipment.