World Bank Group warns of a 3 year food and energy risk.
The president of the World Bank Group warns of a 3 year food and energy risk. David Malpass is the president of the World Bank Group and previously served as Under Secretary of the Treasury for International Affairs for the United States. On 26th June 2022 he spoke to the USA Face The Nation show with host Margaret Brennan.
He said that the world (including China) had seen a sharp slowdown in gdp growth by as much as 50% since Jan 2022. There is also inflation and the food shortages for poorer nations which are already a significant concern. This causes instability in many countries.
Malpass said that central banks now have many more regulatory tools than they did back in 2008 (the previous financial crisis). They also now have huge bond portfolios funded by money from banks. A reduction in bond porfolios would free up capital to th banks to lend so money can be used for supply chain issues. There needs to be much more production of practically everything the world needs particularly by the largest economy - the USA.
Oil companies have heard the message that politicians everywhere don't want their oil. They therefore drill less and invest less. One of the focuses of the recent G7 summit is climate change and to move away from fossil fuels. Europe is pulling in natural gas supplies from around the worls and this adversely affects poorer countries. Malpass said that the world is trying to reduce dependance on China and Russia . But markets should be kept open and countries should not restrict exports at this moment in time.
About Food shortages
Malpass was asked to comment on the food crisis being a 3 year problem (as mentioned by US officials). He responded that the world could produce enough food but at the moment things are too slow (eg fertiliser production) and food shortages may last multiple years. Currency stability and increased production are essential. It may take months , but up to 2 years to bring inflation down. It is a dangerous moment for the world economy.
Interestingly, US Government census website shows that there is already a degree of food scarcity in some states.
US census website food scarcity