The global economy at a "crossroads"

SGGP October 6, 2023 06:18

The United Nations Conference on Trade and Development (UNCTAD) forecasts the world economy to grow 2.4% in 2023, down from 3% in 2022, with little sign of recovery in 2024.

High prices of goods affect people's lives

Slowing growth

In its 2023 trade and development report, UNCTAD warns of a global economic slowdown, with growth starting to slow in most regions from 2022, with only a handful of countries able to buck the trend. According to UNCTAD, the global economy is at a “crossroads” with diverging growth paths, rising inequality, shrinking markets and mounting public debt burdens clouding the economic outlook. The economic recovery from the Covid-19 pandemic is uneven. While some economies, such as Brazil, China, India, Japan, Mexico, Russia and the United States, are resilient in 2023, others face serious challenges. In the context of slowing growth and lack of policy coordination, this divergence raises concerns about the path forward for the global economy.

The report calls for structural reforms of the global financial system, more realistic policies to contain inflation, tackle inequality and public debt, and strengthen oversight of key markets. UNCTAD also urges ensuring transparent and well-regulated markets for a fairer global trading system.

To protect the world economy from future systemic crises, the world needs to avoid past policy mistakes and support a positive reform agenda, according to UNCTAD Secretary-General Rebecca Grynspan. The world needs a balanced set of fiscal, monetary and supply-side policies to achieve financial sustainability, promote productive investment and create better jobs. Appropriate governance mechanisms are needed to address the increasingly apparent asymmetries between the international trading and financial systems.

Urgent issue

Ms. Grynspan warned that efforts by the World Bank (WB), the International Monetary Fund (IMF) and the Group of 20 (G20) to reduce the debt burden in low-income countries were not enough. The process was very slow and many countries still needed help. Therefore, UNCTAD said that better mechanisms needed to be established to resolve the debt problem more quickly.

The UNCTAD Secretary-General stressed the urgent need to prevent countries from defaulting on their debts and welcomed ongoing discussions to give more power to the World Bank and other regional development banks. However, she expressed concern that the current debt management system was too small for the challenges facing the bank, which was growing much more slowly than the global economy and was therefore struggling to meet the growing demand.

Ms. Grynspan added that the debt crisis will be a priority for discussion at the annual meeting organized by the World Bank and the IMF, taking place from October 9 to 15 in Marrakech, Morocco. The meeting is expected to be attended by financial leaders, financial experts, executives of non -governmental organizations and other development organizations.

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