UN warns we are heading for a global recession

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This bad financial news could have an impact on your finances.

Key points

  • The United Nations has warned that political mistakes are being made that could trigger an economic crisis.
  • According to the UN, there is a serious risk of a global recession.
  • The crisis could be worse than the deep recession that occurred in 2007.

The United Nations Conference on Trade and Development (UNCTAD) recently released a disturbing report that contained a dire warning. The report says that unless the fiscal and monetary policies of some of the world’s most advanced economies change quickly, we could be heading for a global recession.

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

Here’s why the UN thinks a global recession is imminent

According to the UN, the threat of a recession is imminent because the central banks of the United States and other economically advanced countries are implementing policies designed to fight inflation that could cause crises, especially in developing economies.

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“Excessive monetary tightening and inadequate financial support could further expose the economies of developing countries to cascading crises,” UNCTAD said.

The agency warned that as central banks raise interest rates to fight inflation, indebted countries could face a debt crisis that would have repercussions around the world. The UN has expressed very serious concerns about the likely outcome of current fiscal policies, indicating that the cost could be high in terms of economic stability and productivity.

Specifically, UNCTAD estimated that global economic growth could fall to 2.2% in 2023, which “would leave GDP below its pre-pandemic trend and cost the world more than $17 trillion in lost productivity “.

The UN has also indicated that there are other problems as well, in addition to rising interest rates. Specifically, the war in Ukraine, supply-side shocks and loss of investor and consumer confidence have also contributed to a global economic slowdown – and these trends are not expected to reverse any time soon.

Climate stress is also intensifying, which risks causing lasting damage to vulnerable areas without the funds to repair and rebuild in the event of a disaster.

This all adds up to a lot of bad news, which is why the UN believes a coming global recession is imminent and likely worse than the last major global financial crisis.

Should we worry about warnings from the UN?

Although the UN’s warnings are dire, the agency’s report made it clear that it may not be too late to change course.

“There is still time to step back from the brink of recession,” UNCTAD chief Rebeca Grynspan said. “It’s a matter of political choices and political will.”

Of course, central banks might ignore this warning. And there are plenty of indicators that bad economic times are coming. However, worrying about it is not productive, since you cannot personally change fiscal policy.

What you can and should do, instead of worrying, is prepare. You need to protect your finances against recession. This means having a generous emergency fund and developing professional skills and a strong professional network in case your job is affected. You should also work on paying off debt to reduce ongoing costs if you have credit cards or other high-interest debt, and make sure you can live on a budget.

If you engage in these smart tax practices, we hope that even a global recession won’t have a lasting impact on your financial future.

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