UN agency warns of recession linked to "reckless" monetary policy decisions.
The International Monetary Fund warned last month that some countries could enter recession next year and revised its growth forecast downward.
(Reuters) - A United Nations agency warned on Monday of the risk of a global recession induced by monetary policy that would have particularly serious consequences for developing countries.
"Excessive monetary tightening can lead to a period of stagnation and economic instability" for some countries, the United Nations Conference on Trade and Development (UNCTAD) said in a statement released along with its annual report.
"Any belief that they (central banks) will be able to bring down prices by relying on higher interest rates without generating a recession is, the report suggests, a reckless gamble," the agency stated.
The report said that higher interest rates, including increases by the Federal Reserve (the US central bank), will have a more severe impact on emerging economies, which already have high levels of public and private debt.
"The possibility of a widespread debt crisis in developing countries is very real," said the report titled "Development Prospects in a Fractured World."
Overall, UNCTAD revised its growth forecast for 2022 downwards to 2,5%, from 2,6% estimated in its March assessment. Growth is expected to be 2,2% in 2023.
The International Monetary Fund also warned last month that some countries could enter a recession next year and revised its growth forecast downward.