United Nations Conference on Trade and Development (UNCTAD) published the Trade and Development Report Update (April 2024) | Current Affairs | Vision IAS

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ESC
  • Report highlights challenges to global merchandise trade, impact of developed economies’ monetary policy and global debt crisis.

 

  • Global trade: In 2023, global merchandise trade fell by about 1% in real terms, partly due to trade tensions among some large economies, subdued global demand and disruptions in key shipping routes.

 

  • Monetary policy impact on developing economies: Factors that have amplified the impact of rapid and simultaneous tightening of monetary policy by major developed economies include:
    • Higher debt servicing costs and difficulty in securing new financing options.
    • Increase in interest rates in developed world depreciating developing countries’ currencies.
    • Double digit interest rates by central banks of many developing countries had adverse impact on domestic demand, employment and household incomes.

 

  • Global Debt Crisis: Developing countries’ governments are struggling under increasing debt payment obligations. 
    • In 2022, they paid $50 billion more to external creditors than they received in new loans.
    • 2022 marks the first occurrence of a net negative resource transfer (more resources have gone to developed countries from developing countries) for all developing countries as a group since 2008. 
    • By 2023, nine low income countries had fallen into debt distress, with additional 25 on the brink.

 

Related Development

  • IMF (International Monetary Fund) Executive Board endorsed reforms to promote the IMF’s capacity to support countries undertaking Debt Restructurings, given the ongoing global sovereign debt challenges.
  • Reforms are designed to support the existing architecture for debt resolution. However, by streamlining processes, the IMF aims to facilitate timely and effective interventions during debt crises.
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