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This bad money news can affect your finances.

Key Point

  • The United Nations warns that policy mistakes are being made that could spark an economic crisis.
  • According to the United Nations, there is a serious risk of a global recession.
  • This crisis could be worse than the deep recession that hit in 2007.

The United Nations Conference on Trade and Development (UNCTAD) recently released a troubling report containing dire warnings. The report shows that unless fiscal and monetary policies are quickly changed in some of the world’s most advanced economies, we could be headed for a global recession.

Not only that, but the economic crisis could be worse than the one in 2007.

Here’s why the United Nations thinks a global recession is imminent

The threat of a recession is imminent as central banks in the United States and other advanced economies implement policies to combat inflation that could trigger a crisis, especially in developing countries, according to the United Nations. .

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“Excessive monetary tightening and insufficient financial support could expose developing economies to cascading crises,” UNCTAD said.

The agency warned that debtor countries could face a debt crisis with ripple effects around the world as central banks hike interest rates to fight inflation. The United Nations has expressed very serious concerns about the expected consequences of current fiscal policy, indicating possible high costs in terms of economic stability and productivity.

Specifically, UNCTAD predicts that global economic growth could slow to 2.2% in 2023, with “GDP falling below pre-COVID-pandemic trends and global productivity losses of 17 trillion. more than a dollar.”

The UN also pointed out that there are other problems besides rising interest rates. Specifically, the war in Ukraine, supply-side shocks, and declining investor and consumer confidence have also contributed to the slowdown in the global economy, and these trends are unlikely to turn around anytime soon.

Climate stress is also intensifying, and without the funds to pay for repairs and reconstruction when disaster strikes, it can cause lasting damage to vulnerable areas.

All this leads to a lot of bad news. That’s why the United Nations believes the upcoming global recession is imminent and likely to be worse than the last major global financial crisis.

Should I worry about the UN warning?

The UN warnings are dire, but a UN agency report makes clear it’s never too late to change course.

“There is still time to take a step back from the brink of recession,” said UNCTAD director Rebecca Grinspan. “This is a matter of policy choice and political will.”

Of course, central banks may not heed this warning. And there are many indicators that bad times are coming. However, you cannot personally change fiscal policy, so worrying about this is not productive.

What you can and should do instead of worrying is preparation. You have to survive a recession financially. That means having a generous emergency fund, developing job skills and a strong professional network in case your employment is affected. If so, you should work on paying off your debt to reduce ongoing costs and make sure you can live within your budget.

We hope that even a global recession won’t have a lasting impact on your financial future if you engage in these wise financial practices.

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