Rising energy prices, higher borrowing costs and a strong El Niño are increasing pressure on developing countries, with conditions nearing those seen during the pandemic, the UNDP said. Its survey found 22 of 26 countries viewed the crisis as a high or medium priority, and all 26 expected conditions to worsen.
Rising energy costs, borrowing costs and a strong El Niño are straining developing countries, with conditions nearing those during the pandemic, the United Nations Development Programme said. UNDP Administrator Alexander De Croo warned that events could trigger a “domino effect” pushing many countries into financial distress, but stopped short of calling for new debt relief.
Governments have used subsidies, tax relief and other measures to shield citizens from higher oil prices, but some began rolling them back in September as fiscal resources dwindled and debt rose. UNDP Chief Economist George Gray Molina said even middle-income countries had rapidly depleted fiscal buffers, and that oil prices and bond-market developments over the next 60 days would be crucial.
UNDP said the strongest El Niño weather effect since 1950 is expected to push 49 million more people into food insecurity by the end of 2027. In its survey, 22 of 26 countries rated the crisis a high or medium priority, 13 said it compounded an existing economic or fiscal crisis, and all 26 said the worst was still to come.
