The United Nations Conference on Trade and Development (UNCTAD) has forecasted a stagnation in global economic growth at 2.7% for 2024 and 2025.
This figure marks a decline from the 3% annual average experienced between 2011 and 2019 and is significantly lower than the 4.4% average seen before the 2008 financial crisis.
The organisation’s Trade and Development Report 2024 has warned that this new “low normal” growth is insufficient to tackle pressing development and climate goals or help ease widespread discontent amidst a global cost-of-living crisis that has left many households in vulnerable positions.
The Global South, which enjoyed robust annual growth rates of 6.6% from 2003 to 2013, has seen this rate diminish to 4.1% over the last decade. This slowdown, the report states, complicates efforts to expand social services, manage rising energy transition costs, and handle increasing public debt. Excluding China, the economies of the global South have averaged 2.8% growth over the past decade.
 Between 1995 and 2007, trade grew at twice the rate of global GDP. Since 2008, that momentum has stalled.
Meanwhile, high interest rates in developed countries and depreciating currencies in developing nations are escalating foreign debt costs. Consequently, many governments are forced to allocate export earnings towards debt repayment rather than development.
The report further highlighted the impact of trade’s stalling growth relative to GDP. While trade expanded at twice the rate of global GDP between 1995 and 2007, this momentum waned post-2008 financial crisis. In 2023, merchandise trade contracted by 1.2%, despite global economic growth.
Conversely, the services sector shows potential as a growth driver, expanding at 5% annually and representing 25% of global trade by 2022. However, this shift poses risks for global inequalities, as developing countries account for less than 30% of global services export revenues.
The report urges bold action to prevent worsening global inequalities, increased social unrest, and challenges in combating climate change. It stresses the need for global support to help developing countries diversify their economies, adopt new technologies, and build resilience against growing economic, social, and environmental challenges.
