unctad.org | To the G24 Finance Ministers and Central Bank Governors
Statement by Mr. Mukhisa Kituyi, Secretary-General of UNCTAD
To the G24 Finance Ministers and Central Bank Governors
[Virtual Meeting]
14 Apr 2020

Prospects for the global economy are currently shrouded in a fog of trade tensions and geopolitical disputes. But the bigger story is that growth has failed to find a firm footing. Monetary normalization has already been put on hold by leading central banks but there are growing concerns that even another round of quantitative easing will fail to provide the needed boost to overall demand. Recessionary winds may below through both the developed and developing world in 2020.

The slowdown this year, 2019, is apparent across all developing regions, with Latin America particularly hard hit. Talk of “decoupling” and “convergence” which briefly captured the popular imagination after the global financial crisis (GFC), when developing and emerging economies bounced back quickly, has today gone quiet. The BRICS economies, which as a group saw average annual growth over 10 per cent immediately after the GFC, grew at 6.3 per cent last year.

Debt levels higher than ever across the developing world, totalling around $67 trillion.

Against a backdrop of rising uncertainty and investor anxiety, a flight from emerging markets to the relative safety of the United States could still trigger a self-reinforcing deflationary spiral.

Heightened trade tensions are a key source of increased uncertainty. Trade has stalled with the weakening of global demand; tariff escalation between the US and China have not helped. There is a growing awareness that the dispute between the United States and China is less about tariffs and more about technological ambitions.

The prospects of new Technological Cold War has already diminished levels of trust in the multilateral system – in particular in the deadlock at the WTO – with further damage to global economic prospects.

Currency movements are also adding to the sense of economic anxiety with sharp fluctuations in crisis-hit countries such as Argentina and Turkey, and the volatility of capital flows to emerging markets resulting from policy uncertainty in the developed countries.

Commodity markets are now in a softer phase, with prices well below post-crisis highs and the general trend is that of a decline in commodity prices that matter most for many developing economies.

The macroeconomic policy stance adopted to date has been lopsided and insufficiently coordinated to give a sustained boost to aggregate demand, with adjustments left to the market through a mixture of cost-cutting and liberalization measures. Short-lived growth spurts and financial volatility have been the predictable results.

You, the G24 ministers of major developing countries have an important role to play raising the call to re-orient global macroeconomic policy coordination towards the most immediate policy challenge facing all countries – the reduction of growing inequalities worldwide and the transition to a green sustainable growth.

UNCTAD has made similar calls in its most recent Trade and Development Report 2019 on the Global Green New Deal, and at our recent UN Trade Forum in Geneva, where Small Island States where among the loudest voices calling on the major economies to re-orient their policies towards growth and development in line with the existential threat to their development. I share the urgency of their message with you today.

We have a long way to go to make trade, finance, debt and banking work for the green transition, productive employment and much needed aggregate demand that our world so desperately needs. I call on you to raise these important issues as you meet with your developed country counterparts later this week.


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