World on the brink of recession warned by UN

The United Nations has warned about the situation of the world economy. The United Nations says the world is “on the brink of recession” and developing countries in Asia could bear the brunt of the recession.

The United Nations Conference on Trade and Development (UNCTAD) said Monday that several factors, including the monetary and fiscal policies of advanced economies, interest rate hikes, could push the world into global recession and stagnation.

UNCTAD released the Trade and Development Report last Monday. It predicts that the economic crisis of 2008 and the corona pandemic crisis could intensify this time around. It added that all regions will be affected, but the alarm bells are ringing most for developing countries, many of which are on the brink of debt.

“Today we must warn that we are on the brink of a policy-induced global recession,” UNCTAD Secretary-General Rebecca Greenspan said in a statement. “We still have time to get back from the brink of the recession,” he said. Nothing is inevitable. We have to change course.”

He added: ‘We advocate a more pragmatic policy mix. “I repeat, a more realistic policy mix, we need to do more to end commodity price speculation,” he said.

The agency also said interest rate hikes in the US this year would cut revenues by an estimated $360 billion for developing countries, excluding China.

The currencies of about 90 developing countries have weakened against the dollar this year due to rising interest rates in advanced economies. East and Southeast Asia are also expected to have lower growth rates than the five years before the pandemic.

According to UNCTAD, East Asia will grow by 3.3 percent this year, up from 6.5 percent last year. The report also said a slowdown in China, along with a slowdown in global demand for expensive imports and exports, will further put pressure on parts of the region.

The debt crisis is intensifying in South Asia and West Asia. Meanwhile, Sri Lanka is in default. Afghanistan is in a debt crisis and Turkey and Pakistan are facing mounting crises. Pakistan has been hit by floods, debts are mounting and foreign reserves are dwindling.

Greenspan said there is time to move away from the risk of a recession if countries use the strategies they have to moderate inflation and help vulnerable groups.

Sources: Reuters, CNBC News

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