Global Economic Slowdown: Poor Countries May see the worst impact next year.

A UN report warns that the poor countries of the world would see the worst impact of worldwide economic slowdown during the next year.

Because of the economic recession worldwide, the expected growth in many developing countries is lower than 1% and the things would be worsen during the next year.

Unctad, UN agency for the developing countries, says that the poor countries could squeeze in the next year because of different factors like high food and oil prices and slow global demand.

In an interview with BBC news, Unctad’s Secretary General, Supachai Panaitchpadki told that the poor as well as rich countries of the world must be careful to raise interest rates to stop mounting inflation.

“In the current weak global economic conditions, steps to tighten monetary policy would make the things worse in developing countries,” the report from Unctad Trade Development says.

According to Unctad the threat of inflation is being over-stated, as the recession will stop inflationary pressure and food and oil prices will maintain near the current levels.

However, the report further says that the prospect for recovery is being hurt by the lack of “policy coordination” on monetary policy as well as exchange rates.

Unctad considers it somewhat extraordinary that the interest rates have cut in the US, while raised in Europe during slowdown.  It warns that in the dollar, further adjustments would be quite painful if current account surplus countries like Japan, China and Germany do not expand their household economies.