Picture Credit: Forbes website
Earlier last week, the UN Conference on Trade and Development (UNCTAD) gave an ominous warning in its 2022 report, it warned of a looming global recession. the report warned that the impending economic crisis could potentially inflict more damage than the 2008 financial crisis and the economic shock brought on by COVID-19 in 2020.
The report has warned that the post-COVID rebound has quickly lost momentum as several nations experience or are on the verge of experiencing an actual recession due to increased uncertainty and rising dangers. While the recession does not have a determined time which it will impact the global economy, the UN calls for an agreement in order to prevent the recession from occurring.
The warning issues by the UN noted that developing nations are most likely to be impacted the most by this recession. According to the report, the global recession and protracted stagnation are the outcomes of monetary and fiscal policy decisions (including interest rate hikes) made in established economies.
According to a monetary agency's (IIF) most recent forecast, the world gross domestic product would expand by 2.2 percent this year, with activity falling to 0.5 percent in the fourth quarter. The UN warns that global economic growth could drop to 2.5% this year and further to 2.2% in 2023.
Indicators of growth momentum, the state of the financial markets, and consumer confidence (an all-time low in a decade for several countries) have all significantly declined recently as rising prices and geopolitical unrest drive economic gloom in the world's main nations.
Picture Credit: Daily News website
The Secretary-General of UN Conference on Trade and Development Rebeca Grynspan stated; “We call then for a more pragmatic policy mix that deploys strategic price controls, windfall taxes, anti-trust measures and tighter regulations on commodity speculation. I repeat, a more pragmatic policy mix ... we also need to make greater efforts to end commodity price speculation.”
A global slowdown could potentially cost the global economy more than $17 trillion in lost productivity, and with the escalating climate stress, and with several countries (60% of low-income countries and 30% of emerging market economies) in or near debt distress; developing and vulnerable economies would be delt a severe blow.
International financial institutions are being urged by the UN organization to urgently inject liquidity and extend debt relief to developing nations, demanding that the IMF permit a more equitable use of Special Drawing Rights, and that nations provide a multilateral legal framework for debt restructuring first priority.
The situation seems intimidatingly dire, but the UN also asserted that by altering policy, governments can stop the downturn. The world body stated, “We still have time to step back from the edge of recession. Nothing is inevitable. We must change course.”
As UNCTAD Secretary-General Rebeca Grynspan said; “We have the tools to calm inflation and support all vulnerable groups. This is a matter of policy choices and political will. But the current course of action is hurting the most vulnerable, especially in developing countries and risks tipping the world into a global recession.”
October 10th 2022 | 9:30 PM