MENA Newswire News Desk: The United Nations Conference on Trade and Development (UNCTAD) has reported that global economic growth is expected to stagnate at 2.7 percent for both 2024 and 2025. This marks a notable decline from the 3 percent annual average observed between 2011 and 2019, which itself is below the 4.4 percent rate seen prior to the 2008 financial crisis.
The report, detailed in UNCTAD’s Trade and Development Report 2024, describes this shift as a “low normal” growth trajectory, insufficient to address pressing development and climate goals. The findings underscore that this low growth could exacerbate the ongoing global cost-of-living crisis, leaving many households vulnerable and frustrated.
The report highlights that while the global South experienced a robust growth rate of 6.6 percent between 2003 and 2013, this has since fallen to 4.1 percent in the last decade. Such diminished growth rates have limited many countries’ abilities to expand social services, cover rising energy transition costs, and address increasing public debt. Excluding China, economic growth in developing nations has averaged a modest 2.8 percent over the past decade.
High interest rates in advanced economies, paired with depreciating currencies in developing nations, are also intensifying the burden of foreign debt. According to UNCTAD, this economic pressure is forcing many governments to redirect significant export earnings towards debt repayment, thereby limiting funds available for essential development initiatives.
Adding to these challenges is the slowdown in global trade relative to GDP. Between 1995 and 2007, trade grew at twice the rate of global GDP, but since the 2008 financial crisis, this momentum has significantly stalled. In a historic shift, merchandise trade contracted by 1.2 percent in 2023, even as the global economy continued to grow. This stalling trade growth, the report warns, could hinder developing countries’ economic progress.
At the same time, service sectors are emerging as a potential growth driver, with an annual growth rate of 5 percent and accounting for 25 percent of global trade by 2022. Despite this shift, developing nations currently receive less than 30 percent of global services export revenue, creating a stark disparity in the economic benefits of this sector. The creative services industry, valued at approximately US$1.4 trillion in 2022, is particularly illustrative, with 80 percent of exports stemming from advanced economies.
The growing significance of intangible assets, such as brand equity, software, data, and patented technologies, further underscores this uneven playing field. In 2023, global investment in intangible assets rose three times faster than physical assets, totaling $6.9 trillion. This trend may widen the developmental gap between advanced and developing economies, warns UNCTAD.
The Trade and Development Report 2024 advocates for bold global support measures to prevent this growing divide from deepening. UNCTAD urges developing nations to lead in diversifying their economies, integrating new technologies, and enhancing economic resilience against mounting social, environmental, and economic risks.