According to UNCTAD’s Trade and Development Report 2022, rapid interest rate increases and fiscal tightening in advanced economies combined with the cascading crises resulting from the COVID pandemic and the war in Ukraine have already turned a global slowdown into a downturn with the desired soft landing looking unlikely.
In a decade of ultra-low interest rates, central banks consistently fell short of inflation targets and failed to generate healthier economic growth.
Bagaimana tanggapan anda mengenai artikel ini?
Any belief that they will be able to bring down prices by relying on higher interest rates without generating a recession is, an imprudent gamble.
At a time of falling real wages, fiscal tightening, financial turbulence and insufficient multilateral support and coordination, excessive monetary tightening could usher in a period of stagnation and economic instability for many developing countries and some developed ones.
This year’s interest rate hikes in the United States are set to cut an estimated $360 billion of future income for developing countries excluding China and signal even more trouble ahead, the report warns.
“There’s still time to step back from the edge of recession,” UNCTAD Secretary-General Rebeca Grynspan said in a media release on Monday.
“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,” Grynspan added.
UNCTAD expects the world economy to grow 2.5% in 2022.
Prospects are worsening, with growth in 2023 expected to decelerate further to 2.2%, leaving real GDP still below its pre-pandemic trend by the end of next year and a cumulative shortfall of more than $17 trillion — close to 20% of the world’s income.
Middle-income countries in Latin America, as well as low-income countries in Africa, will register some of the sharpest slowdowns this year.
(WAH)
