In its 2022 annual trade and development report released on Monday, it said the global economy is expected to grow 2.6 percent in 2022, 0.9 percentage points slower than the rate projected in the report. ‘last year.
He warned that the outlook appears to be deteriorating, with growth expected to slow further next year to 2.2%, leaving real GDP below its pre-Covid-19 trend by the end of 2023.
“In India, the region’s largest economy, economic activity is hampered by higher financing costs and weaker government spending, leading to a deceleration in GDP growth to 5.7% in 2022” , said UNCTAD.
The Geneva-based body said that going forward, the government has announced plans to increase capital spending, particularly in the rail and road sector, but in a weakening global economy, policymakers Politicians will be under pressure to reduce fiscal imbalances, which could lead to lower spending elsewhere.
“Under these conditions, economic growth is expected to fall by one percentage point to 4.7% in 2023,” he said.
While the Asian region has shown relatively buoyant growth rates over the past decade, it is by no means immune to these deteriorating global conditions, according to UNCTAD.
Inflation, interest rate
The Trade and Development Report 2022 warned that rapid interest rate increases and fiscal tightening in advanced economies, combined with cascading crises resulting from the Covid pandemic and the war in Ukraine, have already transformed a global slowdown into a recession, with the desired soft landing looking unlikely.
“Monetary and fiscal policy measures in advanced economies risk pushing the world into a global recession and prolonged stagnation, inflicting damage worse than the 2008 financial crisis and the Covid-19 shock in 2020,” he said. -he declares.
During a decade of rock-bottom interest rates, central banks consistently fell short of inflation targets and failed to generate healthier economic growth. Believing that they will be able to lower prices by relying on higher interest rates without generating a recession is, according to the report, an unwise bet.
At a time of falling real wages, fiscal tightening, financial turmoil, and insufficient multilateral support and coordination, excessive monetary tightening could usher in a period of economic stagnation and instability for many developing countries. and some developed countries, UNCTAD said.