By TIOL News Service

NEW DELHI, SEPT 14, 2017: AS per UNCTAD latest report, the global economy is stuck on its path to recovery. Launching the report, UNCTAD Secretary-General Mukhisa Kituyi said, “A combination of too much debt and too little demand at the global level has hampered sustained expansion of the world economy”. 

The report states that people should be put before profits, calling for a twenty-first century makeover to offer a global “new deal”. Ending austerity, clamping down on corporate rent seeking and harnessing finance to support job creation and infrastructure investment will be key to such a makeover.

UNCTAD notes that the world economy in 2017 is picking up but not lifting off. Growth is expected to reach 2.6 per cent, slightly higher than in 2016 but well below the pre-financial crisis average of 3.2 per cent. Most regions are set to register small gains, with Latin America exiting recession and posting the biggest turnaround, even if only at 1.2 per cent growth. The eurozone is expected to see its fastest growth since 2010 (1.8 per cent) but is still lagging behind the United States of America.

The main obstacle to a robust recovery in the advanced economies is fiscal austerity, which remains the default macroeconomic option. According to UNCTAD findings, 13 out of 14 leading advanced economies experienced austerity between 2011 and 2015.

With insufficient global demand, trade remains sluggish.  A minor improvement is expected this year, because of a recovery in South–South trade led by China. However, there is much uncertainty, especially with regard to commodities trade, where a brief recovery in prices has not been sustained.

In the absence of a coordinated expansion led by the advanced economies, sustaining the limited global economic acceleration hinges on lasting improvements in emerging economies. But while most large emerging economies avoided austerity between 2011 and 2015, and China and India have maintained robust growth rates since, they are now facing significant downside risks. Debt levels continue to rise without real signs of robust growth, and there are concerns about political instability, falling commodity prices, higher interest rates in the United States and a stronger dollar. Capital inflows to developing countries remain negative, albeit less so than in recent years. Furthermore, unforeseen events could knock recovering economies off balance.