The UN Conference on Trade and Development (UNCTAD) has cut its global economic growth projection for 2022 to 2.6 percent from 3.6 percent due to the Ukraine-Russia conflict and changes in macroeconomic policies made by countries in recent months.

Russia will experience "a deep recession" in 2022, and parts of Western Europe and Central, South and Southeast Asia will see "significant slowdowns in growth," the UN agency said Thursday in an update to its Trade and Development report.

The ongoing conflict in Ukraine is likely to reinforce the monetary tightening trend in advanced countries following similar moves that began in late 2021 in several developing countries due to inflationary pressures, with expenditure cuts also anticipated in upcoming budgets, it said.

A combination of weakening global demand, insufficient policy coordination at the international level and elevated debt levels from the pandemic will generate financial shockwaves that can push some developing countries into a downward spiral of insolvency, recession and arrested development.

The economic effects of the conflict will "compound the ongoing economic slowdown globally and weaken the recovery from the COVID-19 pandemic," said UNCTAD Secretary-General Rebeca Grynspan.

The geopolitical crisis has dealt a blow to confidence domestically. "The added pressure of price increases is intensifying calls for a policy response in advanced economies, including on the fiscal front, threatening a sharper than expected slowdown in growth," the report said.

Soaring food and fuel prices will have an immediate effect on the most vulnerable in developing countries.

"The danger for many of the developing countries that are heavily reliant on food and fuel imports is more profound as higher prices threaten livelihoods, discourage investment and raise the specter of widening trade deficits," the report said.

The uncertainties generated by the conflict include an environment of volatile capital flows, exchange rate instability and rising borrowing costs, particularly for least developed and middle-income developing countries, with the risk of serious external debt payment difficulties.

Rate hikes in advanced economies, alongside disorderly movements in global financial markets, could prove a devastating combination for developing economies.