(Original title: United Nations: Fed and other central banks continue to raise interest rates, the global economy is on the verge of recession)
Financial Associated Press, October 4 (Publisher Niu Zhanlin)On Monday, local time, the United Nations Conference on Trade and Development (UNCTAD) released the “2022 Trade and Development Report,” which warns that continued interest rate hikes in advanced economies could push the global economy towards recession and then towards long-term stagnation, Africa and Latin America. Developing countries in other places will bear the brunt.
The warning comes amid growing unease that the Federal Reserve and other major central banks are rapidly increasing financial costs to curb rising inflation.
The report predicts that the global economy will grow by 2.5% in 2022, before slowing to 2.2% in 2023. All regions have been affected by the slowdown in economic growth, but developing countries have been particularly affected.
The debt crises in South and West Asia are intensifying. Sri Lanka has fallen into sovereign insolvency, Afghanistan remains in debt distress, and Turkey and Pakistan face dizzying bond yields.
UNCTAD Secretary General Rebecca Greenspan said there is still time to bring the economy back to the brink of recession and that countries have the tools to tame inflation and support all vulnerable groups. But the current course of action is harming the most vulnerable, especially in developing countries, and threatens to lead to a global recession.
The report found that monetary and fiscal policies in advanced economies could lead to a global recession and prolonged stagnation. Rapid interest rate hikes and fiscal tightening in advanced economies, as well as crises caused by the COVID-19 outbreak and the Russian-Ukrainian conflict, have turned the global economic slowdown into an economic recession and a soft landing is unlikely. .
The agency estimates that every one percentage point increase in the Fed’s key interest rate reduces economic output in other developed countries by 0.5% over the next three years and by 0.8% in poor countries.
Raising rates alone will not reduce inflation
The United Nations Conference on Trade and Development also warned that Federal Reserve rate hikes this year will reduce economic output in poor countries by $ 360 billion over three years and that further policy tightening will do more damage.
“Focusing on monetary policy alone, without addressing the supply side of trade, energy and food markets, could actually exacerbate the cost of living crisis,” UNCTAD said. “In the current context of supply chain challenges and growing uncertainty In the current situation, monetary policy alone cannot reduce inflation.”
UNCTAD recommends that countries focus on wage growth and continue to create jobs. Increase investment in infrastructure to increase employment, increase productivity, improve energy efficiency and reduce greenhouse gas emissions.
UNCTAD also urged countries to adopt a more pragmatic strategy, employing strategic price controls, extraordinary taxes, antitrust measures and stricter regulation of commodity speculation.
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