CAPE TOWN – The global economy remains on shaky ground a decade after the 2008 financial crisis according to the Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion, the flagship report from UNCTAD on the state of the world’s economic system.
The report says that while the global economy has picked up since early 2017, growth remains spasmodic with many countries operating below potential.
Meanwhile, trade tensions signal a deeper malaise in the way the global economy works. The annual Trade and Development Report analyses current economic trends and major international policy issues and makes suggestions for addressing them.
The 2018 report includes an examination of how economic power is being concentrated in a smaller number of big international firms and the impact this is having on the ability of developing countries to benefit from their participation in the international trading system as well as to gain from new technologies and the digital revolution.
Mukhisa Kituyi Secretary-General of UNCTAD said on Wednesday that, "the world economy is again under stress. The immediate pressures are building around escalating tariffs and volatile financial flows but behind these threats to global stability is a wider failure, since 2008, to address the inequities and imbalances of our hyper-globalised world."
Kituyi went on to add that "the growing mountain of debt, more than three times the size of global output, is symbolic of that failure. While the public sector in advanced economies has been obliged to borrow more since the crisis, it is the rapid growth of private indebtedness, particularly in the corporate sector, which needs to be monitored closely; this has, in the past, been a harbinger of crisis."
Lastly, the Kituyi added that the growing indebtedness observed globally is closely linked to rising inequality.
"The two have been connected by the growing weight and influence of financial markets, a defining feature of hyper-globalisation . Banks becoming too big to fail came to epitomise the reckless neglect of regulators prior to the crisis. But the ability of financial institutions to rig markets has survived the early rush of reform in the aftermath of the crisis and efforts are underway to push back even on the limited regulations that have been put in place."
- BUSINESS REPORT ONLINE