Fiscal policies of developed countries are pushing the world into recession

The way developed countries manage their currencies and finances is pushing the world into recession. The United Nations Organization for Trade and Development (UNCTAD) noted that this is causing a protracted crisis. According to the organization, the resulting damage could be greater than the global financial crisis of 2008 and the damage caused by Covid-19 in 2020.

According to the UNCTAD report, the Federal Reserve’s hike in interest rates to contain inflation could reduce the future income of developing countries (excluding China) to $360 billion. According to UNCTAD’s recently published ‘Trade and Development Report 2022’, food inflation has crossed double digits in 69 countries. That is, it has risen above 10 percent. More than 210 crore people live in these countries.

Due to Corona and the ongoing war between Russia and Ukraine, the world is going through an economic recession. The impact of the recession will reduce global economic activity, reduce investment. As a result, the rate of employment decreases and unemployment increases. People’s purchasing power will decline. Previously, the World Bank and the International Monetary Fund (IMF) have expressed such fears in their various reports. This time, the same fear has been expressed in the UNCTAD report. Bangladesh and Sri Lanka are said to have taken measures to reduce energy consumption in order to save foreign exchange in order to cope with the existing crisis in South Asian countries.

According to the report, developed countries have announced that they will reduce the flow of funds this year. The negative impact has already started to subside. The impact will be greater next year. The recession will be more pronounced if the supply chain is further disrupted by the ongoing war between Russia and Ukraine. But everything depends on the war situation of the two countries.

According to the report, global economic growth this year was estimated at 2.5 percent. In March last year, this was expected to be 2.6 percent. But the existing situation will not increase growth. Instead, it may drop to 2.5 percent. Next year it could fall further to 2.2 percent. As the growth rate of developed countries slows, so will global economic growth. This will also reduce the growth of small economies. However, the growth rate of some countries, including China, may pick up slightly next year. But it is less than last year.

According to UNCTAD, the growth of the world’s largest economy in the United States was 5.7 percent in 2021 but could decline to 1.9 percent this year. Next year it could fall further to 0.9 percent. Canada’s growth could slow to 3.2 percent this year. China’s growth last year was 8.1 percent, this year it may decline to 3.9 percent. Next year it could rise slightly to 5.3 percent. Growth in South Asia was 6.8 percent last year. This year it could fall to 4.9 percent. Next year it could fall further to 4.1 percent.

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