The United Nations has warned that rising interest rates and austerity plans by rich countries to combat inflation are raising the risk of a global recession that will hit developing countries the hardest.
The annual report of the UN Conference on Trade and Development (UNCTAD) said that interest rate hikes by major central banks to curb food price hikes are a ‘dangerous gamble’. May lead to unintended consequences.
The United Nations agency said urgent action was needed to save poor countries from debt, health and climate crises, which are already struggling economically due to the Covid-19 pandemic and Russia’s war in Ukraine. .
The report pointed out that political leaders and central banks of developed countries are making mistakes by implementing the austerity policies of the 70s and 80s.
According to the report, the reason for inflation at the moment is the increase in energy and food prices instead of increasing demand.
The report added that strategic strategies such as price control measures, tax cuts and stricter anti-speculation rules on commodities are needed to curb inflationary pressures, which do not affect poorer countries. shall be.
According to the World Organization, developing countries may lose 3.6 trillion dollars in the future due to the possibility of interest rate increase by the United States.
The report stated that some countries such as Sri Lanka have been heavily affected by the recent crisis, while climate change has further damaged the economic stability of countries such as Pakistan.
According to the report, due to the increase in interest rates by the United States, the value of the dollar increased rapidly, due to which the countries importing food items from abroad faced more pressure.
