“For now we have avoided the domino effect of tariff escalation that once brought the world economy to its knees in the 1930s.” Ms Grynspan told UNCTAD members meeting in Geneva to continue efforts to lift millions of people out of poverty through trade.
“This didn’t happen by accident, it happened because of you, because you kept negotiating when it seemed hopeless, defending a rules-based system even as you reformed it, and building bridges even when they fell.”
‘Impossible decisions’
The UNCTAD chief’s comments follow months of global economic uncertainty amid declarations of tariff impositions on US trading partners.
In recent comments, Ms Grynspan said rising tariffs, record debt payments by heavily indebted nations and growing mistrust were holding back development.
“Countries still face a debt and development crisis with impossible options“he said. “They have to decide: not to pay their debt or not to pay for their development.”
Tariffs applied by major economies, including the United States, have risen this year from an average of 2.8 percent to more than 20 percent, Ms. Grynspan recently told the UN General Assembly. “Uncertainty is the highest possible tariff,” he said, adding that it “discourages investment, slows growth and makes trade as a path to development much more difficult.”
Investment is drying up
In Geneva, UNCTAD’s top economist warned that global investment flows are retreating for the second year in a row, “eroding the growth of tomorrow.”
At the same time, the current investment system favors projects in richer economies rather than developing countries, he continued, and one-off costs are responsible for one US dollar being “three times more expensive in Zambia than in Zurich.”
Ms Grynspan also stressed that Freight costs now ‘too volatile’ and landlocked countries and small island developing states are hit with shipping bills “up to three times the global average.”
And while AI offered the potential to add “trillions” to global GDP, the UNCTAD Secretary-General added that fewer than one in three developing countries have strategies to capture its benefits. A staggering 2.6 billion people remain offline, most of them women in developing countries, UN data shows.
Traders transport goods across the border between Rwanda and Burundi.
Public debt crisis
Echoing Ms. Grynspan’s concerns, General Assembly President Annalena Baerbock warned that developing country debt reached $31 billion last year.
This meant that, instead of being able to invest in the future of their people “by building more schools or expanding healthcare facilities, many governments are spending precious funds servicing debt.”
Trust in the international system is also “eroding”, continued the President of the UN General Assembly. He noted that although the global economy is worth more than $100 trillion a year, one in two people has seen “little or no increase in their income for a generation.”