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The United Nations Conference on Trade and Development (UNCTAD) forecasts the world economy to grow by 2.4% in 2023, down from 3% in 2022, with little sign of recovery in 2024.
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Growth slows down
In its 2023 trade and development report, UNCTAD warns of a global economic slowdown, with growth starting to slow in most regions from 2022 and 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. Against a backdrop of slowing growth and a lack of policy coordination, these divergences raise 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 must avoid the policy mistakes of the past and support a positive reform agenda, UNCTAD Secretary-General Rebeca Grynspan said. 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) leading developed and emerging economies to reduce the debt burden in low-income countries are not enough. The process is very slow and many countries still need help. Therefore, UNCTAD believes that better mechanisms need to be established to resolve the debt problem more quickly.
UNCTAD Secretary-General stressed that preventing countries from defaulting on their debts was urgent, and welcomed ongoing discussions to give more power to the World Bank and other regional development banks. However, she was concerned that the current debt-management system was too small for the challenges it faced. The World Bank was growing much more slowly than the global economy, making it difficult to meet the growing demand.
The debt crisis will be a priority at the annual meetings of the World Bank and the International Monetary Fund, which will take place from October 9 to 15 in Marrakech, Morocco, and will be attended by financial leaders, financial experts, NGO executives and other development organizations, Grynspan added.
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