While a recent report by UNCTAD revealed that developing countries are the most affected by the raising of interest rates by some of the leading central banks, economists believe that these countries can survive the recession if a number of measures and measures are taken according to tracks related to supply and demand and policies. Financial, monetary investment and social.
Economist Dr. Imad Al-Musbeh says: “The specter of stagnation and depression hangs over the global economic scene as a result of four factors: changes in US monetary policy for the post-Corona era, changes in energy prices that resulted from the Russian-Ukrainian war, and the rise in the prices of major foodstuffs as a result of this war. In addition to the drought that struck the northern hemisphere, especially in Europe, which caused terrible economic devastation on various fronts, particularly the agricultural production sector, the associated industries, and the logistics sector.
Apart from these four factors, Dr. Al-Musbeh confirms to the “Sky News Arabia” website that low-income countries suffer from structural conditions, the most important of which is the underdevelopment of productive structures in all sectors, pointing to the need for these countries to follow measures according to two paths to achieve development and overcome the crisis of recession and the specter of depression.
Dr. Al-Musbeh explains that the short-term path is concerned with adopting policies that mitigate the effects of non-local factors, and the countries of the world, especially the World Bank and the European Union, must assume responsibility and extend a helping hand to these countries, and one of the most important policies that must be followed is an increase in government spending directed to the health and education sectors. Welfare and lower tax rates on corporate profits that commit not to lay off workers.
Economist Dr. Imad Al-Musbeh added: “As for the long-term path, it is the most complex path, as low-income countries must adopt a competitive investment policy that attracts capital, especially in the manufacturing sector, as well as follow a monetary policy that favors economic growth first and the exchange rate second, in addition to the policy approach Social finance and a strong focus on the education sector.
For his part, the economic expert, Dr. Abdullah Al-Shennawi, believes that the measures that enable developing countries to survive and avoid stagnation are also linked to two aspects related to demand and supply, pointing out that the demand side includes the need for monetary policy to continue in the process of targeting restoring the stability of the general level of prices in a timely manner. Giving priority to fiscal policy is the ability to sustain debts in the medium term, provided that fiscal policy provides support that targets the weak and high propensity to consume, which increases aggregate demand.
With regard to the supply side, Dr. Al-Shennawi stressed in his speech to “Economy Sky News Arabia” the need to follow procedures and measures to ease restrictions facing labor and energy markets, and the need for economic policy makers to prepare to manage the expected repercussions resulting from the simultaneous withdrawal globally from policies that support growth. Economic.
On the debt issue, countries must be prepared to use an integrated set of tools that range from extending debt maturities, using exchange rate flexibility for interventions, and measures to manage capital flows, as well as prioritizing good spending on social safety nets, health and education, so that Spending reaches the most vulnerable groups, according to the economic expert Al-Shinawy.
El-Shennawy summarizes four measures to end the recession: central banks motivate consumers to spend by reducing the short-term interest rate, which makes the cost of borrowing less, and thus the cost of purchase decreases, and the application of tax reduction policies to help consumers with the aim of reducing unemployment, and launching infrastructure programs represented in building Roads, bridges, railways, or so-called public works programs to stimulate demand, in addition to coordinating monetary and fiscal policies in order to support growth, while defining the role of each private policy with regard to targeting inflation and stimulating investment.
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