The Development prospects in a fractured world report pointed out that supply-side shocks, waning consumer and investor confidence, and the war in Ukraine have provoked a global slowdown and triggered inflationary pressures.
The report projects that world economic growth will slow to 2.5% in 2022 and drop to 2.2% in 2023 – a global slowdown that would leave GDP below its pre-Covid-19 pandemic trend and cost the world more than $17 trillion in lost productivity.
Excessive monetary tightening and inadequate financial support could expose developing world economies further to cascading crises, the agency said.
Despite this, leading central banks are sharply raising interest rates, threatening to cut off growth and making life much harder for the heavily indebted.
UNCTAD also noted that the interest rate hikes – including the ones by the U.S. Federal Reserve – would have a more severe impact on emerging economies.