UN Accuses Richest Countries For Triggering Global Recession

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  • Unctad warned the countries against using 1970s and 80s policies to squeeze out inflation saying it is not particularly for current world structure.
  • The report also suggested some of the countries that are having some very serious damages regarding inflation.
  • The UN also suggested an estimated amount of money that is going to be used in developing countries in the future.

UN’s warning

“The usage of rising interest rates and austerity by the world’s richest countries to combat sky-high inflation is gonna lead to a global recession,” warned by the UN.

The UNCTAD reports

“The drive to raise interest rates in correspondence to rising prices by major central banks is an irresponsible gamble and could backfire disastrously.” The United Nations Conference on Trade and Development (UNCTAD) said in its annual report.

Economic downturn

“An urgent course correction is necessary to prevent a downfall of debt, health, and climate emergency for the poorer countries that are struggling to cope with the economic hit from the covid pandemic and the Russia-Ukraine war,” spoke the UN agency.

Highest inflation 

The sharp increase in interest dates was suddenly brought down by major central banks to fight the highest level of inflation in four decades. Even the Us Federal Reserve is battling a sharp rise from next month, alongside many major banks like Bank of England and The European Central Bank.

The Hawkins Policies

The UNCTAD also pointed out the big mistake the political leaders and central banks were making by reverting back to hawkish policies used in the 1970s and 80s to take inflation out of the system.

Burden on Poorer Countries

“Interest rates from the Fed are expected to cut an estimate of $3.6 tn of the future income for developing countries, except China, which hint at more trouble ahead. Countries showing the signs of debt distress before covid are at even bigger risk now (Zambia, Suriname, Sri Lanka) even the climate shocks are threatening economic stability (Pakistan),” as said by the UN body.

The possible Solution

“There is still time to step back from the edge of recession. We have the resources to calm inflation, if chosen to go on the current course of action will only hurt the most vulnerable, especially the developing countries and will risk tipping the world into a global recession.” warned Rebecca Grynspan, Secretary-general of Unctad.

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Source: Guardian

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