UN Warns That Tight Monetary Policy Will Hurt Developing Economies
The UN has warned that if monetary policy continues to tighten, it will only hurt developing economies while failing to bring inflation down.
It is clear that the global economy is in danger when central bank monetary and fiscal policy is not working together. The United Nations Conference on Trade and Development (UNCTAD) released a report on Monday highlighting this very issue. UNCTAD is urging central banks to take action in order to protect the global economy from further harm. It is time for central banks to work together to ensure that the global economy is stable and prosperous.
The article claims that interest rate hikes in the United States will result in a loss of $360 billion in income for developing countries. This is a huge loss that will have a significant impact on these countries.
A Crisis in Developing Countries: What's Causing It and How Can We Help?
The UNCTAD report paints a grim picture for the global economy, with growth rates slowing down significantly over the next few years. This will have a huge impact on development, with many countries unlikely to be able to meet their sustainable development goals. The report is a stark reminder of the need for urgent action to boost the global economy.
I believe that interest rate hikes are disproportionately affecting the poor in developing countries. These countries are seeing their currencies weaken against the dollar, and this is having a negative impact on their standard of living. I believe that this is unfair and that something needs to be done to help these countries out.
“A stronger dollar makes the situation worse, raising the price of imports in developing countries,” reads the report. “The consequences are devastating for the poor across the globe, especially in a time of stagnant wages for most workers.”
It is clear that the British pound is facing some serious challenges against the might of the US dollar. However, it is also worth noting that even Bitcoin has performed better than most fiat currencies against the dollar over the third quarter. This just goes to show that the crypto market is still very much in a volatile state.
There is a real risk of a widespread "debt crisis" in developing countries, according to UNCTAD. Servicing costs on debt across various countries have risen well above 20% of government revenues, with Somalia as high as 96.8%. This is a very serious issue that needs to be addressed urgently.
The Solution: Reverse Course
In its latest report, the UN's trade and development body has called on international financial institutions to do more to support developing countries in the event of a financial crisis. UNCTAD has recommended that these institutions extend more debt and liquidity relief to developing countries, and that central banks in these countries avoid raising interest rates in an attempt to control inflation. Advanced economies, meanwhile, should avoid austerity measures that could further damage the economies of developing countries.
“There’s still time to step back from the edge of recession,” said Rebeca Grynspan, Secretary-General of UNCTAD. “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.”
UNCTAD Director Richard Kozul-Wright has suggested that raising interest rates may not be the best solution to inflation. Instead, he has suggested that policymakers use more targeted measures, such as strategic price controls and taxing windfall profits.
While many economists believe that the U.S. is technically in a recession due to two consecutive quarters of negative GDP growth, I believe that the country is still weathering the storm and recovering from the effects of the pandemic. I think that with continued effort and support, the U.S. will be able to get back on track soon.
The United Nations has warned that continued interest rate hikes by the US Federal Reserve could trigger a global recession. The organisation's Economic Commission for Latin America and the Caribbean (ECLAC) said that Fed rate rises had already contributed to the current slowdown in the world economy.