The United Nations Conference on Trade and Development (UNCTAD) warned Monday (3rd) that if the US Federal Reserve (Fed) and other central banks continue to raise interest rates, they could push the world into a recession, a “global recession triggered by monetary policy.” ”, With potentially disastrous consequences for developing countries.
“Excessive monetary tightening could plunge some countries into a period of economic stagnation and instability,” UNCTAD said in its annual Global Economic Outlook report. “It’s a rash bet to believe that central banks can raise interest rates to suppress prices without triggering a recession.”
The report pointed out that interest rate hikes by the Fed and many central banks will have the worst impact on emerging economies, where public and private debt is already high. Reports and alerts of potential debt crises in developing countries.
The Indian central bank said on Friday that the global economy is facing a “third shock” after the Covid-19 epidemic and the Russian-Ukrainian war, namely aggressive interest rate hikes in rich countries.
UNCTAD Secretary General Rebeca Grryspan has suggested that in addition to raising interest rates, there are other ways to suppress inflation, such as taxation on corporate profits, tightening controls to prevent speculation in the markets raw materials and addressing supply-side bottlenecks.
In the report, UNCTAD revised its global economic growth forecast this year to 2.5% from 2.6% in March, with a further slowdown to 2.2% next year.
The International Monetary Fund also warned last month that some countries could slide into recession next year and revised growth forecasts downwards.
IMF Chief Executive Kristalina Georgieva said on Monday that a global recession could be avoided if governments’ fiscal policy were coordinated with tighter monetary policy.
