The G20 warns that the rate hike will affect emerging economies more


The Financial Stability Board (FSB, for its acronym in English), which integrates the G20 countries, has warned that emerging and developing economies suffer more risks than those advanced in the face of the rise in interest rates and the weakening growth. In a report published this Monday, the Financial Stability Board explains that “in general, scarring risks in emerging and developing economies appear to be much more significant than in advanced economies“.

The Financial Stability Board has delivered this letter to the leaders of the G20, who meet in balinese on November 15 and 16. It highlights that, in a situation where many countries were reducing political support measures by the Covid-19 pandemic, “Russia’s invasion of Ukraine has severely exacerbated the challenges existing ones and created some new ones to ensure financial resistance and a sustained flow of financing to the real economy“.

The recovery from the economic impact of the pandemic crisis has been different depending on the country. So the improvement in many emerging and developing economies was impeded because of its “limited ability to provide additional political support“with budgetary stimuli.

Problems in global supply chains, Recovery of global demand and demand stimuli in some countries have put pressure on the inflation rises. That is why financial conditions began to tighten after the central banks interest rates rise, while growth weakens.

Russia’s invasion of Ukraine has exacerbated problems that already existed and given a setback to global growth. “Russia’s invasion of Ukraine has added to these pre-existing challenges to a strong, equitable and inclusive recovery by causing a setback to global growthtrigger inflation and add economic uncertainty,” according to the report. The Financial Stability Board, which is based in the Swiss city of Basel, was created at the G20 meeting in London in 2009 by the financial crisis and has since watched over the financial stability.


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