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Rising inflation could pose serious political challenges - S&P Global Ratings

Other News Materials 13 June 2022 17:11 (UTC +04:00)
Rising inflation could pose serious political challenges - S&P Global Ratings
Nargiz Sadikhova
Nargiz Sadikhova
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BAKU, Azerbaijan, June 13. Against the backdrop of situation in Ukraine, rising inflation, especially in food prices, could pose serious political challenges for governments, the S&P Global Ratings told Trend.

The official said that already, various governments across regions have taken steps in to provide support to offset the rapidly escalating worsening in food prices.

“As our analysis confirms, absent remedial measures, the countries worst affected are likely to be some of the world’s poorest. While even a one-year shock of the magnitude observed would be likely to cause malnourishment and increase food poverty, if our thesis of fertilizer shortage and export restriction-driven multiyear shock plays out, the impact could be catastrophic, absent remedial measures,” the agency said.

The agency added that these negative developments will make it harder for governments to contain, let alone reverse, the weakening of public finances that has taken place since the advent of the COVID-19 pandemic.

“The combination of slower economic growth and rising public pressure to increase subsidies could contribute to larger fiscal deficits and worsening government debt burdens. Rising inflation, especially in food prices, could pose serious political challenges for governments, as the Arab Spring showed,” the agency said.

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