International Economy
In March 2022, UN Secretary-General Antonio Guterres warned of a “hurricane of hunger and a meltdown of the global food system” in the wake of the crisis in Ukraine. https://countercurrents.org/2022/08/an-engineered-food-and-poverty-crisis-to-secure-continued-us-dominance/
Guterres said food, fuel and fertiliser prices were skyrocketing with supply chains being disrupted and added this is hitting the poorest the hardest and planting the seeds for political instability and unrest around the globe.
According to the International Panel of Experts on Sustainable Food Systems, there is currently sufficient food and no risk of global food supply shortages.
We see an abundance of food but skyrocketing prices. The issue is not food shortage but speculation on food commodities and the manipulation of an inherently flawed global food system that serves the interests of corporate agribusiness traders and suppliers of inputs at the expense of people’s needs and genuine food security.
The war in Ukraine is a geopolitical trade and energy conflict. It is largely about the US engaging in a proxy war against Russia and Europe by attempting to separate Europe from Russia and imposing sanctions on Russia to harm Europe and make it further dependent on the US.
by Colin Todhunter
22/08/2022
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The World Bank (WB) has cut its global growth projection for this year from 4.1% to 2.9%, warning that many countries are likely to face recession.
“Amid the war in Ukraine, surging inflation, and rising interest rates, global economic growth is expected to slump in 2022,” the Tuesday WB press release said.
Below-average Growth
“Several years of above-average inflation and below-average growth are now likely, with potentially destabilizing consequences for low- and middle-income economies. It’s a phenomenon – stagflation – that the world has not seen since the 1970s.”
According to the report, both rich and poor countries would be hit by the growth slowdown, but developing and emerging market economies are the most vulnerable. Growth in advanced economies was forecast to decline from 5.1% to 2.6% this year, while in emerging and developing countries it is expected to drop from 6.6% to 3.4%.
World Economy Is Again In Danger
“Just over two years after Covid-19 caused the deepest global recession since World War II, the world economy is again in danger … Even if a global recession is averted, the pain of stagflation could persist for several years – unless major supply increases are set in motion,” said the report.
08/06/2022
Is organic farming responsible for Sri Lanka's economic crisis? https://www.youtube.com/watch?v=RYnkhBux9WU Apr 15, 2022
Sri Lanka is going through its worst economic crisis. There are protests, and cabinet resignations, the President himself is desperately trying to hold on to power. This mayhem that the country is going through has been squarely blamed on the shift to organic farming. But is this the case? Or did the economy collapse because of a series of blunders that have been going on for years with the shift to organic being the last nail in the proverbial coffin?
In 2016, A movement comprising academics and civil society began to grow with a demand for going back to organic farming. This movement was called Viyath maga, which among other things pushed for a change in the way agriculture was practised on this island. Sensing an opportunity, Sri Lanka’s President Gotabaya Rajapaksa made organic farming a poll promise as part of his 2019 election campaign. And on April 29, 2021, he kept his poll promise by ordering the country’s 2 million farmers to go organic, overnight. But, Why did Rajapaksa decide to go organic? It was not that he believed that organic farming could feed Sri Lanka’s population. But because he wanted to save foreign exchange bills on imported fertilisers. Sri Lanka imports all its fertiliser from mainly China and India. At that time, the total cost of fertiliser imports and subsidies was also close to $500 million. This may not look like a huge amount, but according to the world bank, Sri Lanka’s foreign reserves stood at around $5.7 billion in 2020. This meant Sri Lanka was spending roughly 10% of its reserves on importing fertilizer. Then, in 2020, Covid-19 happened! The bill was already straining the country’s reserves, but the pandemic almost emptied it out. Tourism contributed close to $478 million in 2018 which fell to $50 million in 2020. Similarly Sri Lankan economy is dependent on the export of items such as tea, rubber, coconut, spices and garments which contribute close to a quarter of its GDP. Since 2012, there has been a slowdown in exports of these goods. Sri Lanka is also saddled with a mammoth external debt of nearly $45 billion. According to Sajith Premadasa, the leader of Sri Lanka’s opposition, close to $8 billion of this debt is from China. A lot of this debt was for projects that could have been money-spinners for the country, but many of them became non-starters. Like the Hambanthota port, for which Sri Lanka took $1.2 billion from China. But Sri Lanka could not run the port and repay its loan to China. It renegotiated the loan and handed the port to China on a lease for 99 years. Today, Sri Lanka’s foreign reserves stand at only $2 billion.
Sri Lanka’s economic crisis was not a result of organic farming, but poor economic policies. When the Rajapaksha announced the shift to organic, less than 3% of Sri Lanka’s farmland was farmed without chemicals. The country needed time to change and adjust to the Organic way of farming, They also needed support and good organic substitutes to smooth the transition. Bhutan for example announced in 2008 that it will become fully organic by 2020. Bhutan is yet to achieve that target. As for Sri Lanka, the impact of a series of poor economic policies, sheer shortsightedness and a heavy reliance on foreign funds will hurt the 20.1 million Sri Lankan population for years to come.
https://economictimes.indiatimes.com/prime/money-and-markets/seven-nations-have-defaulted-in-2023-so-far-will-there-be-a-spillover-effect-on-global-markets/primearticleshow/99621614.cms Will there be a spillover effect on global markets?
A recent report from Moody’s states that bond default rates are at the highest since 1983. Sovereign default risks have materialised in some emerging and frontier market economies as the turning credit cycle and growing macroeconomic headwinds create complex challenges for these countries, compounding the problems they already face.