Food inflation a threat for recovery: World Bank official
Higher food prices pose a major threat to the global economy and social stability but policymakers must not over-regulate commodity markets, a senior World Bank official said on Thursday.
January 27, 2011 / 14:53 IST
Higher food prices pose a major threat to the global economy and social stability but policymakers must not over-regulate commodity markets, a senior World Bank official said on Thursday.
Ngozi Okonjo-Iweala, managing director at the Washington-based bank, said rising food prices are squeezing the poor and contributing to social instability."Higher food prices and volatility are one of the biggest threats to the global economic recovery and social stability. You saw what happened in Algeria and other countries recently -- there's no doubt higher food prices and a stress in living standards are taking a toll," Okonjo-Iweala, former Nigerian finance minister, said."This will hit the poor the hardest. We're not going to see cheap food prices again because this is a long term phenomenon... We need more investment in Africa because more than 50% of arable land in the world today is in Africa."Algeria was forced to slash taxes and import duties on some staple foods after a sharp rise in food inflation triggered a wave of riots. But analysts have said much of Africa may be in a better position than previously to deal with a global surge in food price pressures.French President Nicolas Sarkozy, who will address delegates at the World Economic Forum later on Thursday, has called for new rules to curb commodity price volatility, warning that the world risks food riots and weaker growth if leaders fail to act.Okongo-Iweala said a certain amount of regulation oversight is needed, especially in the key commodity markets."But we have to be careful about overregulation. We need some regulation but not a heavy hand. We need to develop commodity markets in key areas such as in Africa, that will enable farmers to plan for the future," she told Reuters.She added that Africa had around half of the world's arable land and more investment is needed. The World Bank has identified a USD 31 billion shortfall in the continent's infrastructure funding requirements. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
