Priority, industrialized countries, inflationthrough an increase in interest and tax adjustments, just speed up what you want to avoida recession spherical This could force many countries to default on their sovereign debts.
an extraordinary group economists UN This Monday, he presented a report analyzing whether the measures taken would really help avoid a new global economic crisis and concluding that the decisions of the major central banks have brought the world closer to an abyss.
“We must warn the world that we may be on the verge of a global recession caused by the policies adopted“, said Rebeca Grynspan, head of the UN Trade and Development Agency (UNCTAD).
The concrete danger is that what is coming Worse than the 2008 financial crisis and the covid-19 pandemic, with unacceptable social costs that will push millions of people into extreme poverty.
“Politicians have focused on easing inflationary pressures through tight monetary policies in the hope that central banks can achieve a soft landing and avoid a major recession, but the cure may be worse than the disease,” he says.
The effect of interest rate increase
In the report prepared at the UN Trade and Development Agency (UNCTAD), governments have not learned their lessons and are repeating the same policies They failed to control inflation in the 1970s and 1980s and instead led to deep economic crises.
“It is unwise to believe that[central banks]can lower prices without causing a recession, thanks to high interest rates,” experts say.
His calculations show that rising interest rates in the United States will cut $360 billion from future revenues for developing countries (excluding China).
The report also warns of the risk of a debt crisis that could spread to developing countries. Today, half of all low-income countries and one-third of middle-income countries are in debt.
Another feature of this crisis is that it will not decentralize and no region will be immune from its consequences, although it will be harsher for countries with fewer resources.
growth forecasts
UNCTAD estimates growth of the global economy will be 2.5% this year, Although the outlook deteriorates in 2023 (2.2%), which is believed to be more pronounced, the slowdown is lower than the International Monetary Fund’s forecast (2.8%).
With regard to inflation, the report explains that it has been empowered by companies that have increased their prices and speculative businesses into energy sources to achieve higher margins and thus take advantage of the global recovery that has occurred after the acute period of the pandemic has passed.
Price increase serious concernAs noted in a chart in the report, which shows 69 countries with a combined population of 2.1 billion and had double-digit inflation in June of this year compared to 23 countries a year ago.
UNCTAD, interest rates will have little effect on these factors and instead it would lead to a sharp correction in commodity and asset prices, including cryptocurrencies and the real estate and metals markets.
According to UN experts, governments should seriously consider other ways to control inflation, such as price controls in strategic areas, regulation of speculative transactions in sensitive markets, debt relief and aid to the most vulnerable groups.