BY ONOME AMUGE
The lingering Ukraine-Russian war has placed a more daunting challenge on the global economy, leading to a one percent drop in projected economic growth from the earlier predicted 3.6 percent to 2.6 percent, according to the United Nations Conference on Trade and Development (UNCTAD).
Richard Kozul-Wright, director, UNCTAD division on globalisation and development strategies, explained that the inter-governmental organisation had in September 2021, anticipated that the global economy would grow by around 3.6 percent, but downgraded its predictions following the over one-month war and its adverse implications.
With inflation on the rise and developing countries already weighed down by a $1 trillion debt burden to pay back to creditors, UNCTAD has expressed discontentment over the inadequate financial measures already taken to help the affected countries withstand exchange rate instability, rising interest rates and soaring food and fuel prices.
UNCTAD further explained that the world’s poorest, import-dependent countries will be the worst hit by the global economic downturn, due to the rise in prices of food,energy and fertilisers.
Though it is expected that all regions of the global economy will be adversely affected by the crisis, the UNCTAD said high commodity exporters were likely to make gains from a rise in prices.
Kozul-Wright, while appealing to the International Monetary Fund (IMF) and World Bank to assist the developing countries, said; ‘Wholesale multilateral fiscal reform – possibly on the scale and ambition of the US Marshall Plan that shouldered Western Europe following the Second World War – is urgently needed to improve the financial liquidity of developing countries to prevent them – and even middle-income countries – from potentially going under.”
Speaking in the same vein, Rebeca Grynspan, UNCTAD secretary general, stated that there is a rapidly worsening outlook for the world’s economy after two years of COVID-19 crisis. She added that in 2022, the average rate of growth of the world economy will be 2.6 percent, down from 5.5 percent in 2021.
Grynspan tasked the IMF and World Bank to activate emergency measures and rapid funding instruments. The IMF, according to her, can help countries with looming balance of payments problems.
In its policy recommendations, the UNCTAD emphasised the need for global financial reform to enable developing countries the economic space for growth so that they can service potentially crippling debt levels.