Geneva, 26 March 2022 (TDI): The United Nations Conference on Trade and Development (UNCTAD) highlighted the effect of the Russia Ukraine crisis on the global economy in a report published on the 24th of March.
Global economic growth is expected to slow down to 2.6% from a previous growth rate of 3.8%. The drop in growth rate comes from the changes in macroeconomic policies many countries have made over the course of the previous month.
The conference updated its Trade and Development report and said that a deep recession is expected of Russia this year but many countries in Western Europe and most of Asia will also face slowdowns in growth.
“The economic effects of the Ukraine war will compound the ongoing economic slowdown globally and weaken the recovery from the COVID-19 pandemic.” -UNCTAD Secretary-General Rebeca Grynspan.
Many countries have struggled to gain economic traction after coming out of the COVID-19 pandemic and this war will further exacerbate their efforts to rebuild their economy and rebound.
Many economies around the world are facing strong headwinds from the war which could potentially lead to civil unrest around the globe.
“Many developing countries have struggled to gain economic traction coming out of the #COVID19 recession and are now facing strong headwinds from the war.”
— UNCTAD chief @RGrynspan on the war in Ukraine’s impact on the global economy. https://t.co/GeaWYc43F7 pic.twitter.com/xjIZK06TQh
— UNCTAD (@UNCTAD) March 25, 2022
The report says that countries that are heavily reliant on food and fuel are likely to be the worst affected. Fuel prices have surged significantly since the conflict started and many countries are facing high fuel costs and even shortages.
The most vulnerable developing countries that spend most of their income on food will face a significant loss in their purchasing power. The slowdown in growth has been worse than expected.
There is a serious risk of external debt payment difficulties for developing countries as capital flows have been volatile, the exchange rate has been very unstable and borrowing costs continue to rise.
Interest rate increases in developed economies could prove detrimental to developing economies. Developing countries are projected to require a sizeable $310 billion to meet external public debt service requirements in 2022.
