Trade and Development Board, 75th executive session - Item 2: Interdependence and development strategies in a globalized world

Excellencies,

Distinguished delegates,

Good morning,

The global economy continues heading in the wrong direction: Divergent growth paths, widening inequalities, growing market concentration and mounting debt burdens.

These cast shadows on our ability to make meaningful progress towards the Sustainable Development Goals.

The global economy enters 2024 at stall speed. Economic growth slowed in 2023 to an estimated 2.4 per cent, down from 3 per cent in 2022. 

Growth across countries was uneven. While some economies, including Brazil, China, India, Japan, Mexico, Russia and the United States have shown resilience, others face considerable challenges.

There are few signs of a significant rebound for this year, and no clear driving force to propel the world economy onto a robust recovery track.

For 2024, we can expect a small improvement in global growth which is contingent on recovery in the euro area and on other leading economies avoiding adverse shocks.

Good signs are that commodity prices are down from their peaks in 2022 and that inflation is coming under control in many parts of the world. Yet, inflation is still above pre-pandemic levels.

But economic inequality remains a significant challenge.

Developing countries are disproportionately affected, including by the effects of monetary tightening in the advanced economies. This widening wealth gap threatens to undermine the fragile economic recovery as well as the achievement of the SDGs.

And debt burdens remain a major concern, amid rising interest rates and weakening currencies. Together with sluggish export growth, debt burdens have squeezed the fiscal space for essential needs and transformations in many developing countries. As a consequence, about 3.3 billion people — or 40 per cent of humanity — live in countries that spend more on debt interest payments than on education or health.

As Secretary-General Grynspan has argued, this shows how much the debt problem is in fact a development crisis.

But despite these challenges, there is a notable absence of adequate multilateral responses and coordination mechanisms.

Geopolitical factors and resulting fragmentation are driving a fundamental change in global interdependence.

What we see is a transition from hyperglobalization to polyglobalization. By this we mean that there is a plurality of economic powers with increasingly their own forms of multilateralism or competitive multilateralism. It also influences the orientation of supply chains.

We need a change in policy direction with adequate and coordinated policy responses, and mechanisms to chart a more robust and resilient trajectory for the future.

It requires a balanced policy mix of fiscal, monetary and supply-side measures to achieve financial sustainability, boost productive investment and create better jobs. Regulation needs to address the deepening asymmetries of the international trading and financial system.

The Trade and Development Report makes several proposals. Let me highlight four points.

ONE - The role of central banks needs to be expanded beyond inflation targeting to include a broader focus on long-term economic sustainability. Also, international coordination among central banks should be strengthened as their actions have spill-over effects.

TWO - Concerted efforts are needed to increase real wages, as well as concrete commitments towards comprehensive social protection.

THREE - The policy mix needs to enable developing countries to transition to green economies.

But the energy transition cannot happen without two elements.

First, much more climate finance.

Second, more and better access to green technologies. This will require stronger multilateral cooperation and appropriate agreements in the World Trade Organization, the International Monetary Fund and the World Bank. While these points were central at the recent COP in Dubai, concrete action and delivery of climate finance still needs to happen.

And FOUR – Debt: Addressing the debt issue is paramount. UNCTAD calls for meaningful reforms of the rules and practices of the international financial architecture.

We need an effective debt-relief mechanism that supports payment suspensions, longer lending terms and lower rates.

We need affordable, long-term finance for investment in countries. Re-capitalizing multilateral development banks offers a good avenue.

UNCTAD fully supports the call for a SDG Stimulus of at least 500 billion US dollars a year.

Dear friends,

There are many challenges ahead of us. Thus, we need more, and not less, solidarity, cooperation and multilateralism.

Much is at stake, but also much is in our hands.

Thank you.