High food prices to weigh on Mena economies' growth in 2023, World Bank says

Soaring food prices will weigh on the growth of Middle East and North African economies this year, as double-digit food inflation hits poorer households and intensifies food insecurity in the long term.

Mena countries' gross domestic product is expected to slow to 3 per cent in 2023, from 5.8 per cent in 2022, while real GDP per capita — a measure of living standards — will decelerate to 1.6 per cent this year from 4.4 per cent in 2022, according to a report by the World Bank on Thursday.

About one in five people living in developing countries in the Mena region is likely to face food insecurity this year and almost 8 million children under the age of 5 years will be hungry, said the report, which examined the impact of rising food prices on the region.

“Food price inflation is having a devastating impact on poor families. The long-term implications of food insecurity will be felt for generations and sadly limit prospects for many, many young people,” Ferid Belhaj, World Bank vice president for the Mena region, said.

“The human and economic cost of inaction is immense and bold policies are needed in a region where young people make up more than half of the population.”

A household is classified as severely food insecure when at least one adult in the household in the last 12 months has been forced to reduce the quantity of food consumed, to have skipped meals, to have gone hungry, or gone a day without eating because of a lack of money or other resources.

More than 141 million people in the Arab world are exposed to food insecurity as Russia’s invasion of Ukraine chokes crop supplies, the International Monetary Fund said last year.

“Food price inflation, even if it is temporary, can cause long-term and often irreversible damage,” said Roberta Gatti, World Bank chief economist for the Mena region.

Average year-on-year food inflation in the Mena region between March 2022 and December 2022 was 29 per cent, above 19.4 per cent headline inflation, and these spikes in food prices can have long lasting effects on future generations, the lender said.

The increase in food prices associated with Russia's invasion of Ukraine may have increased the risk of stunting in children by between 17 per cent and 24 per cent in developing countries in Mena region, which translates to about 200,000 to 285,000 stunted newborns, the report said.

“Inadequate nutrition in utero and early childhood has the potential to disrupt the destinies of children, setting them on paths to limited prosperity,” Ms Gatti said.

The prevalence of food insecurity in the Mena region is high and projected to increase to 17.6 per cent this year from about 11.8 per cent in 2006, the World Bank said.

This is largely due to extreme situations in Syria and Yemen that have been identified by the Integrated Food Security Phase Classification (IPC) as having areas in crisis.

“The time to act is now even when the macroeconomic conditions are unhelpful,” the report said.c

“Governments in the region need to act now not only for humanitarian reasons but for economic reasons as well — undernourished children grow up to become less productive workers. The challenge of food insecurity is enormous in scale.”

The projected development financing needs for people facing severe food insecurity in the Mena region run to billions of dollars annually.

Meanwhile, policy tools that could alleviate the problem before it escalates into a full-blown crisis include targeted cash and in-kind transfers that could be introduced immediately to stem acute food insecurity, the World Bank said.

Mothers in particular would benefit from improved parental leave, childcare and medical care, which are important for a child’s development, the report said.

Improved and more current data on the state of childhood health and nutrition are needed, along with better access to administrative information that would help target priorities and reach vulnerable populations more easily.

Making food systems more resilient and strengthening supply chains, especially in the face of climate and future market shocks, is essential, the report added.