UN Report: Clock Ticking to Dodge Global Recession Worse Than ‘08

Monetary policies instituted to offset inflation in developed nations like the U.S. and the U.K. are negatively affecting emerging markets, causing the United Nations and other transnational institutions to sound the alarm that the world could be on the brink of a global recession.

There’s still time to pull the world back from the edge of a policy-induced disaster that could inflict worse damage than the financial crisis in 2008, but central banks in growing economies have to change course, according to a joint report released on Monday (Oct. 3).

Among the data and projections presented, the report outlines tactics central banks can adopt to help support a more balanced world economic playing field. One way suggested is for advanced economies to consider ways to reduce inflation other than raising interest rates.

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The Trade and Development Report specifically asks that central banks in developed economies reverse course and “avoid the temptation” to lower prices by relying on higher interest rates.

“Our report lays out a strategy of increased cooperation among developing countries,” Rebeca Grynspan, secretary-general of the United Nations Conference on Trade and Development (UNCTAD), said in a statement about the report. “With reforms to the multilateral architecture, we can shift the global economy in the right direction.

“We still have time to step back from the edge of recession. Nothing is inevitable.”

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Grynspan pointed to the falling real wages being faced by many places in the world. The current monetary and fiscal policy decisions in advanced economies are having a negative effect on the poorest regions, and are also affecting social and climate goals, she said.

“They could inflict worse damage than the financial crisis in 2008,” Grynspan added. “We do not believe it is possible to bring down prices by relying only on higher interest rates without generating a recession.”