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Ukraine war spurs global recession as growth forecast slips – Global issues

Richard Kozul-Wright, Director, said: “The headline is the downgrade of the global growth forecast for this year. UNCTAD Development and Globalization Strategy Division, speaking in Geneva.

“We predicted last September that the global economy would grow around 3.6%. We expect it to grow 2.6% this year and of course the main contributing factor to that is the war in Ukraine. ”

Trillion Dollar Debt

With inflation rising and developing countries already saddled with $1 trillion in debt to pay their creditors, the United Nations agency has criticized inadequate financial measures that have been taken. to help them cope with exchange rate volatility, rising interest rates and soaring food and fuel prices. .

Wholesale multilateral fiscal reform – possibly on the scale and ambitions of the US Marshall Plan that covered Western Europe after World War II – is needed to improve the financial liquidity of developing countries . UNCTAD insists to prevent them – and even middle-income countries – from potentially being dealt with, UNCTAD insists, for calling on the International Monetary Fund toIMF) and the World Bank.

Emergency measures call

“This is a rapidly deteriorating outlook for the world economy and think that this year, the year after two years of crisis with COVID-19The average growth rate of the world economy will be 2.6%, down from 5.5% last year and down from forecasts made in the quarter, said Rebeca Grynspan, UNCTAD Secretary General. the last of 2021”.

Especially, Ms. Grynspan called for “urgent measures from the IMF and the World Bank”.”, namely the activation of the rapid financing tools that the IMF can provide to help countries experiencing balance of payments problems.

The UNCTAD chief continued: “Conditions are getting worse for everyone, noting how the climate crisis has played a role, along with successive droughts in the Horn of Africa, ongoing COVID-19 pandemic and war in Ukraine.

Even relatively affluent countries, which are struggling with a lot of cost-of-living pressures, have sought help from the international system to keep them afloat.

“Pakistan came back (to the IMF) late last year,” said Mr. Kozul-Wright. “Sri Lanka has now gone to the IMF to organize a programme. Egypt, which was already part of a program, returned to the IMF to renegotiate. And these are the countries – these are not the least developed countries, These are middle-income countries that are experiencing very severe economic pressure and in some cases political pressure, as a result of the shocks they are facing.. ”

World Food Program (WFP) employees load bags of yellow split peas into a truck in a WFP warehouse based in El Fasher, North Darfur, Sudan.

© UN Photo / Albert Gonzalez Farr

World Food Program (WFP) employees load bags of yellow split peas into a truck in a WFP warehouse based in El Fasher, North Darfur, Sudan.

Importer’s woes

But it is the poorest, import-dependent countries that will be hardest hit by the global recession, UNCTAD stressed.

Developing countries are bearing the brunt because the prices of food, energy and fertilizers are going up so dramatically and also the financial strain that developing countries are having,” said Ms. Grynspan.

Although “all sectors of the global economy will be adversely affected by this crisis”, Mr. Kozul-Wright said that “high commodity exporters” are likely to do well due to high prices. get a raise. “But The European Union will see a sizable drop in its growth this year…so will parts of Central and South Asia as well,” he said.

UNCTAD’s policy recommendations include the need for global financial reform to give developing countries the economic space to “reasonably grow” so that they can service their underlying debt levels. weaken.

“The debt repayment in 2020 for developing countries excluding China is already $1 trillion, which is the kind of financial pressure that developing countries have to bear,” said Richard Kozul-Wright.

“We know and we have argued in the past that initiatives from the G20, the Debt Service Suspension Initiative are welcome, we welcome it, but obviously not enough, it provides something worth $11 billion to eligible countries. . ”

Development challenges of least developed countries in 4 charts

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