United Nations Conference on Trade and Development (UNCTAD) on 6 October 2015 released the Trade and Development Report 2015 at its headquarters in Geneva, Switzerland. The report is titled Making the international financial architecture work for development.
Besides reviewing recent trends in the global economy, the report suggested ways to make international financial architecture, including IMF and World Bank, work for development.
Report with respect to trends in the global economy
• Following the 2008−2009 crisis and the rebound in 2010, the global economy has been growing at around 2.5 per cent.
• The growth rate for 2015 is expected to remain more or less unchanged from last year, at 2.5 per cent.
• Developed countries are expected to grow at around 1.9 per cent, compared with 1.6 per cent in 2014, as growth in the eurozone and Japan is experiencing a moderate acceleration, although from very low rates.
• The United States is expected to continue its post-crisis growth trajectory with an estimated growth rate of 2−2.5 per cent, which is below previous recoveries.
• Between 2012 and 2014, world merchandise trade grew between 2 and 2.5 per cent (very similar to the rates of global output). These growth rates are significantly below the average annual rate of 7.2 per cent recorded during the 2003–2007 pre-crisis period.
The report further prescribed following reforms in the global monetary and financial architecture in order to avoid any recurrence of financial crisis of 2008-09 and to augment investments for achieving the Sustainable Development Goals 2030 in the given time frame
• To avoid secular stagnation, developed countries need to combine monetary expansion with fiscal expansion and wage growth, and be mindful of the international spillovers that their policies can produce
• To make the provision of official international liquidity more stable and predictable developing countries may build on regional and interregional initiatives, set swap arrangements among Central Banks and reduce the need for reserve accumulation; Swap arrangement between the Bank of Japan and the Reserve Bank of India is a case in point.
• A bolder regulatory agenda should include strict separation of retail and investment banking, strong regulation of shadow banking as well as public oversight of credit rating agencies and their progressive substitution by more appropriate mechanisms for risk assessment
• New sovereign debt restructuring mechanism should be evolved based on a multilateral treaty defining a set of rules for a debt restructuring that restores growth and debt sustainability
• The international community needs to meet its Official Development Assistance commitments and to tune it better to strengthening the productive economy.
Report with respect to India
The report projected that India’s gross domestic product (GDP) is expected to grow at 7.5 per cent in 2015 as the pressure on current account deficit has been easing due to the lowering oil prices in the international market.
However, on flip side, India’s export growth (by volume) slowed down from 8.5 per cent in 2013 to 3.2 per cent in 2014 due to the continuing not so optimistic trend in the global economy.
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What: Released by UNCTAD
When: 6 October 2015