Advanced economies need to alter their monetary policy, as interest rates hiking by central banks could spark a global recession, according to a United Nations trade group.

"Excessive monetary tightening could usher in a period of stagnation and economic instability," the United Nations Conference on Trade and Development warned in a statement on Monday, shortly after releasing a report on growing recession risks.

In the report, the UN group said its growth estimates for the global economy fell  from 2.6% to 2.5% this year and expects an even more significant slowdown in 2023, with just 2.2% growth next year.

"Any belief that [central bankers] will be able to bring down prices by relying on higher interest rates without generating a recession is, the report suggests, an imprudent gamble," the group added.

That's primarily due to global inflationary forces, with nations being smacked by soaring energy prices amid Russia's war on Ukraine and lingering supply-chain issues from the pandemic. Eurozone inflation skyrocketed 10% last week despite aggressive rate hikes from the European Central Bank. US inflation also remains stubborn to Fed policy, only cooling slightly to 8.3% in August.

 "What does seem likely is that the impact of Fed tightening will be more severe for vulnerable emerging economies with high public and private debt," the report said, calling a debt crisis a "very real possibility" for developing countries. 

Top economist Nouriel Roubini warned on Monday there are signs that a debt crisis has already started, and a hard landing of the economy before the end of the year is now the baseline scenario.

Noble laureate Paul Krugman has also warned that the Fed's rate hikes could have an outsized effect on the global economy.