Russia’s invasion of Ukraine is triggering an increase in poverty in Colombia and the rest of Latin America, according to the United Nations (UN).
In a report, the UN’s Economic Commission on Latin America and the Caribbean (ECLAC) said that it would expect Colombia’s poverty rate to increase from 36.3% to 38%.
This implies that almost 880,000 people will enter poverty this year in Colombia.
The country’s projected 1.7 percentage point increase in poverty is the highest in all of Latin America and the Caribbean, according to ECLAC.
Second surge since pandemic
The war in Eastern Europe will undo part of the poverty reduction measures that were put in place after the COVID-19 pandemic in 2020.
The economic crisis caused by the pandemic and measures to prevent mass deaths caused the biggest surge in poverty in the past two decades, particularly in Colombia.
Poverty in Colombia and the region
The causes of the expected increase in poverty
The projected poverty increase in Colombia and the rest of the region would be mainly due to “uncertainty, inflation (particularly in food and energy), and a deceleration of economic activity and trade,” said ECLAC.
The region confronts domestic contexts marked by a sharp economic slowdown, rising inflation and a slow and incomplete recovery of labor markets, which will increase poverty and extreme poverty levels. As a result, 7.8 million people are forecast to join the 86.4 million others whose food security is already at risk.
Soaring food prices attributed to the war in Ukraine would have the most impact on poor people who have not been able to recover from the coronavirus pandemic, according to ECLAC.
Colombia’s extraordinary inflation in food prices
Colombia’s statistics agency DANE said Monday that that inflation in May was 9% compared to the same month before.
The inflation was mainly due to a 21.6% surge in the price of food and non-alcoholic beverages, according to DANE.
The surging food prices in Colombia are considerably higher than the region, which registered an average increase of 12.5% in March, according to ECLAC.
The regional surge in food prices would be mainly due to the disruption of trade in fertilizer, of which Russia is one of the world’s main producers.
Urgent response needed: ECLAC
The UN commission said that “pro-growth fiscal and monetary policies will be needed to respond to the current scenario and stimulate sustainable and inclusive growth.”
ECLAC specifically urged countries to take measures that would increase tax revenue and drive down inflation.
The international organization additionally urged to maintain or amplify welfare programs for the poorest sectors of society.
Food security must be a priority. Thus, international trade in food and fertilizers should not be restricted since doing so would accelerate inflation and hurt those who are poorest. Officials must also consider measures such as maintaining or increasing food subsidies, implementing agreements with producers and marketing chains to contain prices of items in the basic food basket, and reducing or eliminating tariffs on imports of grains and other basic products.