(Bloomberg Opinion) — Russia’s invasion of Ukraine will become a last straw for the world economy, with developing countries especially at risk, the United Nations has warned.
Global growth is likely to slow to 2.5% in 2022 after rising 5.6% last year, the United Nations Conference on Trade and Development (UNCTAD) said in a report on Thursday. .
UNCTAD forecasts a deep recession in Russia and a “significant” slowdown in Western Europe and most of Asia. While the sharp rise in food and fuel prices will save the hunger and hardship of people in the poorest countries, eventually all will experience a reduction in purchasing power, he says.
“The economic effects of the war in Ukraine will exacerbate the slowdown in the world economy and weaken the expected post-pandemic recovery,” said UNCTAD Secretary-General Rebeca Grynspan. “Many developing countries have struggled to gain economic traction coming out of the reception of covid-19 and are now facing strong headwinds from war.”
Poorer nations could soon face a storm of weakening global demand, rising interest rates in advanced economies, and high levels of debt stemming from the pandemic, which could “push some developing countries into a insolvency, recession and arrest of development,” according to the report.
UNCTAD urged monetary policymakers to take measures to protect the world economy such as increased multilateral financial support to developing countries; immediate debt relief for Ukraine; increased use of IMF Special Drawing Rights to provide liquidity; and price controls and subsidies.
World economy to slow amid ‘strong headwinds’ of war, UN says
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