Developing nations face triple shock from energy crisis, El Niño and borrowing costs, UN warns

AI desk brief

The UNDP warns developing countries are facing a three-way shock from elevated energy prices, El Niño and a global bond sell-off, with sovereign borrowing costs now around 9% for some issuers. The combination is forcing governments to withdraw emergency support, raising the risk of deeper fiscal strain and renewed inflation pressures.

For metals, the macro mix is mixed but broadly supportive on a risk basis: oil back above $100/bbl and climate-driven food shocks argue for stickier inflation, while the bond sell-off and higher financing costs keep pressure on growth and financial stability. The report also highlights a potential need for liquidity support and swap lines if market stress worsens.