CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The United Nations Conference on Trade and Development (UNCTAD) has released a report titled “Trade and Development Foresights 2025 – Under Pressure: Uncertainty Reshapes Global Economic Prospects”. The findings paint a concerning picture for the global economy, with growth projections significantly reduced to just 2.3%, underscoring a marked departure from pre-COVID-19 performance.
Global Growth Forecasts
According to the report, worldwide economic expansion is set to drop below the 2.5% benchmark, a level typically associated with recession-like conditions. This sharp deceleration is particularly alarming for vulnerable and low-income economies, many of which are already grappling with economic stagnation.
Rising Uncertainty In Economic Policy
The Economic Policy Uncertainty Index surged to unprecedented levels in early 2025, reflecting deep investor anxiety over unpredictable trade measures and global instability. Financial volatility is rising, with the US stock market’s "fear index" reaching its third-highest point in history—trailing only the 2008 financial crisis and the 2020 pandemic.
Weakening Trade Trends
While global trade saw a brief revival at the end of 2024—driven by early shipments ahead of anticipated tariffs—this momentum quickly faded. From January to March 2025, freight rates plummeted by 40%, indicating a notable contraction in international trade flows.
Trade uncertainty is compounding this issue, causing:
Delays in capital investments
Disruptions in global supply chains
Reduced employment opportunities and declining business confidence
Development Finance Under Stress
The report highlights that development finance is under immense strain. Official Development Assistance (ODA) is decreasing, with initial data suggesting an 18% fall in aid from major donor countries between 2023 and 2025. This poses a serious threat to achieving the Sustainable Development Goals (SDGs), particularly in health, education, and poverty reduction.
Developing Economies In Crisis
Many low-income nations are facing a multifaceted crisis characterized by:
Excessive debt burdens
Subpar economic growth
Expensive borrowing costs
Of the 68 countries categorized as low-income, 35 are either in debt distress or approaching it. These fiscal challenges are diverting funds away from vital sectors such as healthcare and education. Meanwhile, investor capital is increasingly flowing toward more stable developed markets, further straining the finances of emerging economies.
South–South Trade On Rise
Trade between developing nations often referred to as South–South trade—now constitutes nearly one-third of global commerce. This sector is expanding more rapidly than the overall trade average, particularly in East and Southeast Asia. Strengthening regional trade ties may offer some protection against global economic shocks.
UNCTAD’s Strategic Recommendations
To address these economic pressures, UNCTAD suggests a multi-pronged approach:
Enhance regional and global cooperation to stabilize trade and financial systems.
Reinforce multilateral frameworks to better support developing countries.
Encourage stronger trade partnerships among developing nations to build economic resilience.
Reorient public spending: Reduce expenditures on defense, Increase investments in infrastructure, climate resilience, and social safety nets
Align fiscal and trade policies with long-term development and sustainability targets
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