Rising food and fuel costs have pushed up the cost of living in many Asian economies. Soaring food and fuel prices are threatening to derail growth in Asian economies, according to a report by the Asian Development Bank (ADB).The bank has warned that if food and fuel prices continue to surge, economic growth in the region could be reduced by up to 1.5% this year. According to the bank, domestic food prices have risen at an average of 10% in many Asian economies this year. Oil prices have also surged because of the crisis in the Middle East.The bank said that a combination of these two factors has been a major setback for growth in Asian economies.
"Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia”
Asian Development Bank
While Asian economies have emerged strong from the global financial crisis, the rising cost of living has become a big concern in the region. The ADB has warned that the recent surge in food price is threatening to push millions of Asians into extreme poverty.According to the bank's study a 10% rise in domestic food prices may result in almost 64m people being pushed into extreme poverty.According to the ADB's chief economist, Changyong Rhee, "for poor families in developing Asia, who already spend more than 60% of their income on food, higher prices further reduce their ability to pay for medical care and their children's education." "Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia." he added.
The bank also warned that food prices will remain volatile in the short term. It said that while there have been production shortfalls in some countries because of bad weather, prices have also been pushed up by other factors, such as the weakening US dollar and rising fuel costs.This has resulted in many countries imposing export bans on their produce, a practise that is not helping the cause, according to the bank.
"To avert this looming crisis it is important for countries to refrain from imposing export bans on food items, while strengthening social safety nets," said Dr. Rhee. "Efforts to stabilize food production should take centre stage, with greater investments in agricultural infrastructure to increase crop production and expand storage facilities,"Dr Rhee added that these measures will ensure that food produce is not wasted, thus helping to keep prices in check.