Lower economic growth, trade disruptions to hit development: UNCTAD

Market expectations for lower interest rates raise hope for mitigating the pressure on private and public budgets worldwide this year, the report notes.

However, monetary policy alone cannot provide solutions to key global challenges, it says, pointing to the ongoing crises linked to sovereign debt, ever-growing inequalities and climate change.

UNCTAD secretary general Rebeca Grynspan, ahead of the Spring Meetings of the Internatioonal Monetary Fund and the World Bank that she will participate in, strongly urged concerted multilateral action and a balanced policy mix, underlining that global policy coordination remains the key to safeguarding the global economy amid shifting trade patterns, soaring debt and mounting cost of climate change all of which disproportionately affect developing countries.

Grynspan highlights two critical areas. “We call for coordinated multilateral efforts to address the asymmetries of international trade and market concentration,” she said.

“Borrowing countries need more fiscal flexibility to reach the Sustainable Development Goals. This can only be achieved through an inclusive and global reform of the global financial safety net,” she was quoted as saying by a UNCTAD release.

In 2023, despite stable employment, inflation decreased, indicating that supply-related issues, not just demand, contributed to earlier inflation. The report found no evidence of a feared cycle where rising wages drive up prices, with real wages still below pre-pandemic levels and lagging behind productivity growth.

The global economy grew by 2.7 per cent last year, but international trade in goods decreased by 1 per cent. Although there has been some recovery in 2024, it is unlikely that merchandise trade will be a significant driver of growth this year, the UCTAD report notes.

Despite some improvement, subdued growth is expected in global merchandise trade this year.

Prospects for services trade are relatively better, it adds, cautioning that rising protectionism, trade tensions and geopolitical uncertainty not only hamper economies, but also imperil concerted multilateral solutions at a time when international trade collaboration is needed more than ever.

Fibre2Fashion News Desk (DS)