UN: Global fuel subsidies may exceed $1 trillion amid price shocks

The UN program noted that most government interventions focus on protecting citizens from price increases through subsidies, price caps, and rationing. "Most government requests to the UN development system involve mobilizing additional fiscal and financial resources to pay for this growing burden," the UNDP said.

Developing economies are identified as particularly vulnerable, struggling to contain the socio-economic impacts of fuel, energy, food, and transport price shocks. The report also cited broader global issues, including the Middle East crisis, El Niño, bond market volatility, and disruptions in key shipping corridors such as the Strait of Hormuz, the Red Sea and Bab el-Mandeb, the Black Sea, and the Panama Canal.

These factors create a "broad shock-management challenge for developing countries already struggling with limited fiscal space, high debt, inflationary pressures and import dependence," the UNDP report concluded. Governments face a difficult trade-off: either pursue price containment, requiring additional fiscal resources, or allow prices to rise and provide temporary cash transfers to protect vulnerable populations.