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Will Our Economic Collapse Cause the Death of Millions Abroad?

As the wealthier nations cease investing in the developing world or acquiring its exports, the crisis is hitting them with a vengeance.

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Add all this up, and it's likely that "the slowdown in growth will likely deepen the deprivation of the existing poor." In many LICs, moreover, "large numbers of people are clustered just above the poverty line and are therefore particularly vulnerable to economic volatility and temporary slowdowns." As the intensity of the crisis grows, more and more of these people will lose their jobs or their other sources of income (such as those all-important remittances) and so be pushed from above the poverty line to beneath it. The resulting outcome: "The economic crisis is projected to increase poverty by around 46 million people in 2009."

The picture provided in the Bank's G-20 report turns even darker when turning to an assessment of the capacity of affected LICs to address the needs of all these newly impoverished people. Because so much of the income of these countries derives from the sale of commodities -- the demand for which has significantly diminished (thus lowering prices) -- and because foreign loans and investment have largely dried up, the governments involved have precious little money left to provide emergency services for their country's growing legions of poor. The implications are ominous.

"Absent [public] assistance, households may be forced into the additional sales of assets on which their livelihoods depend [e.g., farm implements and livestock], withdrawal of their children from school, reduced reliance on health care, inadequate diets and resulting malnutrition." The long-run consequences of these desperate actions can be severe: "The decline in nutritional and health status among children who suffer from reduced (or lower-quality) food consumption can be irreversible." Already, "estimates suggest that the food crisis has...caused the number of people suffering from malnutrition to rise by 44 million."

These estimates — an increase in those forced into poverty by 46 million and those suffering from malnutrition by 44 million -- far exceed anything reported anywhere else. And they must be viewed as preliminary figures, subject to recalibration based on the duration and severity of the global meltdown. If the Bank's prognostications on the likely impacts of the crisis on the LICs prove accurate, these figures could rise much higher.

Looming Food Insecurity

The spring growing season has now begun in many areas of the world, and worried agricultural experts are already calculating the prospects for food availability later this year. Their worries are well-founded: Last spring and summer, rising oil prices and localized food shortages led to food riots in Cameroon, Egypt, Ethiopia, Haiti, India, Indonesia, Ivory Coast, and Senegal, among other countries. (The price of food is closely tied to the price of oil, as modern agriculture relies heavily on petroleum products for cultivation, harvesting, delivery to markets, pesticides, and artificial fertilizers). Food prices have since fallen somewhat with the decline in petroleum costs, but supplies are also at risk of contraction due to severe drought in many parts of the world — hence the concern over food availability in 2009.

The first assessment of food availability in 2009 is now out, and the prognosis is not promising. Published by the Food and Agricultural Organization (FAO) of the United Nations, the first 2009 report on "Crop Prospects and Food Situation" provides a region-by-region overview of farm output around the world. Although some areas are expected to experience better-than-average harvests, most are not. The report's principal conclusion: "Early indications point to a reduction in global cereal output in 2009 [over 2008]. Smaller plantings and/or adverse weather look likely to bring grain production down in most of the world."

The report's most significant findings are to be found in its overviews of the various growing regions, where two key areas -- Asia and South America — are at particular risk because of mounting water scarcity.

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