UN forecasts further decline in global economic growth

ADDIS ABABA, Ethiopia

United Nations Conference on Trade and Development (UNCTAD) on Wednesday forecast a further decline in global growth this year.

UNCTAD made the revelation at the launch of its flagship publication: Trade and Development Report 2016.

“Slower growth in developing economies compounds concerns for the global economy. In 2016, global growth will likely drop below the 2.5 per cent figure registered in 2014 and 2015. […] UNCTAD economists would not be surprised if it dropped further,” the report said.

It also warned of increasing vulnerability of developing countries to volatile global financial markets, including speculative and sizeable capital flows.

“Alarm bells have been ringing, in particular, over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion,” the report said.

Launching the report were Padmashree Gehl Sampath from UNCTAD’s Globalization and Development Strategies Division and Taffere Tesfachew, special adviser to the Secretary-General.

In a presentation made to reporters, both experts agreed that African economies were doomed to slow down due to their dependence on commodities.

Sampath said commodities-based economies “…depended on greater global demand,” hinting at the risks associated with the impact from the fall in global prices for commodities.

According to Tesfachew, Africa’s economic woes were mainly caused by the loss of appetite in China for imports of commodities.

“Developing economies should create linkages between their commodities sector to manufacturing for value addition,” he said.

Tesfachew said the year 2016 was dubbed by global economists as the “year of stagnation”.

The report recommended that “…global leaders use bolder macroeconomic policies, strengthened regulation of finance and active industrial policies.”