Updated: October 11, 2026

Developing economies are facing overlapping pressure from high energy prices, climate risks linked to El Niño and expensive borrowing, according to a warning from the United Nations Development Programme (UNDP) ahead of the IMF and World Bank Annual Meetings in Bangkok.

The Guardian’s report on the UNDP warning says the three pressures are arriving at a time when many governments have limited fiscal room to protect households and maintain public services.

How the pressures reinforce one another

1. Energy and fertilizer costs

Conflict-related disruption to energy supplies can raise fuel, transport and electricity costs. Higher fertilizer prices can then increase the cost of producing food, placing pressure on farmers, consumers and government support budgets.

2. El Niño and food security

El Niño can shift rainfall and temperature patterns, increasing the risk of droughts, floods or damaging heat in different regions. The impact varies by location, but agricultural losses can add to food-price pressure and make rural livelihoods more vulnerable.

3. Higher borrowing costs

When governments must pay more to refinance debt, less public money may be available for health, education, infrastructure and climate adaptation. Countries with large external financing needs are particularly exposed to a combination of costly imports and expensive credit.

Why the IMF–World Bank meetings matter

Finance ministers and central-bank officials meeting in Bangkok face the challenge of supporting vulnerable countries without worsening debt risks. Options discussed internationally include targeted crisis financing, debt restructuring, more affordable development finance and better coordination between lenders.

Reuters also reported on October 11 that the World Bank was discussing potential crisis assistance with dozens of countries amid energy-price pressure and the prospect of severe El Niño impacts: read the Reuters report.

What it means for households and businesses

For households, the risks may appear through food, transport and electricity bills. Businesses may face higher input costs and more uncertain demand, while governments could have less room to absorb shocks. The scale of the impact will depend on local weather conditions, energy-import dependence, fiscal buffers and the support measures available.

Bottom line: The warning is about the interaction of several risks, not a prediction that every developing country will experience the same outcome. The key question is whether international financing and domestic policy can help vulnerable economies manage immediate costs while preserving long-term investment.

Sources