The global economy slows down due to less trade and inflation

By Luke Anami

Global economic growth is forecast to slow from three percent in 2022 to 2.4 percent in 2023, partly due to the slower movement of goods and services, according to the UN report.

UN Conference on Trade and Development (UNCTAD) its Trade and Development Report 2023 He also says workers are unlikely to get a pay rise this year as wages and salaries have failed to keep up with inflation.

The report, released on October 4, calls for the change in policy direction and accompanying institutional reforms promised during the Covid-19 crisis to avoid a lost decade.

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„There are five messages we want to emphasize from the report. The first message is that the global economy is slowing, despite the good news of an unexpectedly soft landing for the US economy this year. But the prospects for accelerating growth in the coming years are slim,” UNCTAD said during a virtual press conference. Secretary General Rebecca Grinzpan said.

„The second message is that debt is a problem and many developing countries are in a debt and growth crisis. Many developing countries, including middle-income countries, need to be part of the international debt debate to find the right solutions for debt restructuring.

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Rising interest rates, weak currencies and sluggish export growth are squeezing financing space for essential needs.

Investment is also weak in the face of credit crunch, Grynspan said, and there are concerns about market concentration and lack of competition in financing trade in key markets such as energy, food, pharmaceuticals and digital.

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„The question of where the new sources of growth will come from needs to be addressed,” he said.

Unattainable SDGs

Rising interest rates, weak currencies and slowing export growth mean the prospect of achieving sustainable growth targets by 2030 is fading, the report warns.

According to: African economies struggle with financial constraints

Grynspan proposed that interest rates should not be the only way to turn around the economy, as part of his recommendations to fix the global faltering economy.

The report calls for a change in policy direction – including leading central banks pushing for global financial reforms; more pragmatic policies to tackle inflation, inequality and the sovereign debt crisis; Stronger oversight of key markets and reform of the international financial system.

The UNCTAD boss called for a revision of the inflation target to two percent.

„Uncorrected, this could mean parallel damage to long-term financial stability, especially for developing countries, but also for developed countries,” he warned.

It will be a tool to deal with liquidity problems, the level of investment required from multilateral development banks and, as I said earlier, a permanent mechanism to deal with debt problems in developing countries,” he explained.

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