The United Nations has a warning for central banks: Stop raising interest rates so quickly, or risk capsizing the world economy. 
In announcing a new report released Monday, the UN Conference on Trade and Development (UNCTAD) said that "excessive monetary tightening and inadequate financial support could expose developing world economies further to cascading crises." 
The warning comes as central banks all over the world follow the lead of the U.S. Federal Reserve, which has accelerated the pace of its rate increases in recent months while delivering a message that the hikes won't stop until inflation is brought under control.
As Fed Vice Chair Lael Brainard explained in a recent speech, nine central banks from countries accounting for half of global gross domestic product (GDP) have raised rates by 125 basis points over the past six months, "a rapid pace by historical standards." 
While the global agency usually doesn't meddle in countries' monetary policies, the economic risks of continued hikes demand action, according to the report. 
The report, titled "Development Prospects in a Fractured World," projects that global economic growth will slow from 2.5 percent in 2022 to 2.2 percent in 2023, putting global gross domestic product below its pre-pandemic trend and wiping out $17 trillion in productivity. For heavily indebted countries, the downturn could be disastrous. 
"The global slowdown will affect all economies," UNCTAD said. "But developing countries are exposed most to the cascade of debt, health and climate crises." That includes both middle-income countries in Latin America and low-income countries in Africa, a large portion of which have seen their currencies plummet against the dollar. 
On the one hand, cheaper currencies make exports more competitive. On the other hand, imports and dollar debts become more expensive. This presents a potential existential threat to the debt-distressed countries, as they run out of dollars to pay off loans. 
"Developing countries have already spent an estimated $379 billion of reserves to defend their currencies this year, almost double the amount of new Special Drawing Rights recently allocated to them by the International Monetary Fund (IMF)," UNCTAD said. 
The UN noted that this economic conundrum is coming at the exact moment that countries all over the world require massive fiscal investments to combat climate change and other pressing global problems such as hunger and energy shortages. 
"Climate stress is intensifying, with mounting loss and damage in vulnerable countries who lack the fiscal space to deal with disasters, let alone invest in their own long-term development," the report said. 
Fed officials such as Brainard have publicly recognized the potential downside of continuing to raise rates, but are near unanimous in saying the central bank will stay the course until inflation is brought down to around 2 percent. 
"Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target," Brainard said. "For these reasons, we are committed to avoiding pulling back prematurely. We also recognize that risks may become more two sided at some point."