A new UN Conference on Trade and Development (UNCTAD) report has said that, six years after the start of the global economic and financial crisis, the world economy has still not found a sustainable growth path.
The report, subtitled: “Global governance and policy space for development”, suggested that
“getting back to business as usual has failed to address the root causes of the crisis and the ‘new normal’ has some worrying parallels with the conditions that initially led to the global financial crisis in 2008, namely rising inequalities and asset bubbles.”
In a statement on the report, UNCTAD said “with expected growth of 2.5 to 3 per cent in
2014 keeping the global recovery weak, policies supporting it are not only inadequate but often
inconsistent.
“This means that simply relying on buoyant asset prices, trade competitiveness and declining
wage shares to maintain growth cannot bring the world economy back to robust health.”
It noted that, “indeed, developing countries have managed to recover from the ‘great recession’
after 2009 faster than developed countries, in part by supporting domestic demand with
countercyclical policies.”
“However, there have been limitations and the idea that emerging economies have decoupled
from events in the advanced economies is no longer tenable,” the statement said.
It said the report also points out that growth in Japan and the US is not expected to improve
in 2014, while growth will exceed 5.5 per cent in Asian and sub-Saharan countries, but will
remain subdued at around 1 per cent in North Africa and Latin America and the Caribbean.
It also revealed that transition economies are expected to further dip to around 1 per cent,
from an already weak performance in 2013.
“Developing countries will continue to face the challenges of a persistent instability of the
international financial system and tackling this requires macroeconomic and regulatory
policies and mirroring economic activity, international trade remains lacklustre due to weak
global demands.
“Breaking from this protracted period of low economic growth requires strengthening
aggregate demand through real wage growth and more equal income distribution rather
than new ‘financial bubbles’, ” the statement quoted the report as saying.
