Arab political economy is being cruelly ravaged by the cost of living problem
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Salma Hossein
- . January 31, 2023
- . Update: January 31, 2023 9:02 pm
It has long been evident that the poor in the Arab world is suffering as a result of unstable economies, weakening currencies, and inflation that is robbing them of their purchasing power. However, more families are finding it difficult to put food on the table as even the middle classes in certain nations start to feel the strain.
Manar, a 38-year-old Egyptian mother of two, told the news organisation Agence France-Presse, “It’s like we were hit by an earthquake; suddenly you have to let go of everything.”
People’s once-semi-human existence has now been reduced to contemplating the price of bread and eggs.
The devaluation that was required as part of a $3 billion loan agreement with the International Monetary Fund has caused the Egyptian pound to lose half of its value against the dollar since March of last year. In December, the official annual headline inflation rate in the nation reached 21.9 per cent, while food costs have increased by 37.9 per cent.
Following the COVID-19 pandemic, the Egyptian economy had been having a difficult time regaining its footing. However, the newest crisis was brought on by Russia’s invasion of Ukraine, as both of those nations are important sources of mass tourism and wheat exports to Egypt.
Nearly a third of Egypt’s 104 million people already live below the poverty line, and nearly as many are “prone to falling into poverty,” according to the World Bank.
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The year 2023 is already dogged by grim economic predictions, with economists expecting a worsening global recession that will result in greater currency devaluation, surging prices, and rising unemployment and poverty rates.
The global economy has experienced numerous setbacks during the last year. With the start of the war in Ukraine about a year ago, nations and industries that were only now beginning to recover from the lockdowns, restrictions, and other impacts of the COVID-19 pandemic experienced a new blow.
As a result of the conflict’s disruption of global supply networks, the cost of food and fuel has increased significantly, putting pressure on inflation. This has further weakened national currencies and business confidence, jeopardising employment and slowing GDP.
The most vulnerable countries are particularly concerned about the decline in the value of Arab currencies relative to the dollar because households that had amassed savings previous to the financial crisis have seen the value of their financial reserves plunge and safety nets removed from under them.
The Lebanese pound has set another record low, and since the country’s financial crisis began in late 2019, it has already lost approximately 95% of its value.
While the public’s purchasing power continues to decline, Jordan, Syria, and Iraq are also seeing sharp increases in the price of food, petrol, and other necessities, which has resulted in protests and sporadic waves of violent upheaval.
According to the Survey of Economic and Social Developments in the Arab Region, which was released in December by the UN Economic and Social Commission for Western Asia, around 130 million people in the region are currently living in poverty.
