The United Nations Trade and Development Report Update (April 2024), says governments of developing countries are struggling under increasing debt burdens.
The report, published on the UN Trade and Development website, explained that the debt crisis is draining valuable public resources from the affected developing countries.
It added that the development had forced the affected governments to pay $50 billion to creditors in 2022, instead of channelling such financial resources for the developing of its people.
Debt dynamics in developing countries
The report revealed that high global interest rates have compounded the problem for developing countries,with currency depreciation making foreign-denominated debt more costly.
- “Developing countries’ governments are struggling under increasing debt payment obligations. In 2022, they paid $50 billion more to external creditors than they received in new loans.
- “By 2023, nine low-income countries had fallen into debt distress, with an additional 25 on the brink, underscoring a worsening global debt crisis.
- “Commodity markets remain volatile despite falling by 6.8% in 2023, commodity prices remain significantly higher than pre-pandemic levels.”
- “The energy sector saw the largest price drop at 16.1%, yet prices are still about 40% higher than the averages between 2015 and 2019.”
- “These elevated prices benefit exporters but heavily burden net commodity-importing developing countries.”
Regional economic outlooks
According to the report, Africa’s economy is projected to grow at 3.0% in 2024, but armed conflicts and climate impacts pose significant challenges in several countries.
” Meanwhile, the continent’s largest economies – Nigeria, Egypt and South Africa – are underperforming, affecting overall prospects,” it added.
The report states other continents will have its fair share of economic challenges.
- “Americas: Growth is expected to slow, with Argentina facing severe inflation, and Brazil’s economic momentum dampened by external pressures and reliance on commodities. North America remains relatively resilient, though challenges continue.
- “Asia: China targets around 5% growth in 2024, capitalizing on robust manufacturing and trade. India’s economy is buoyed by strong public investment and service sector growth, with a forecasted expansion of 6.5% in 2024.
- “Europe: Struggling with weak economic activity, countries like Germany and Italy are facing industrial slowdowns and fiscal constraints, impacting their growth projections.
- “Oceania: Economic growth in the region, particularly in Australia, is expected to remain subdued, with the low-growth period extending into 2024.”
The updated report forecasts a global economic growth to 2.6% in 2024
More Insight:
- The UN Trade and Development is a United Nations agency that monitors and coordinates economic development among nations.
- Several countries’ governments are looking up to some international agencies like World Bank and the International Monetary Fund(IMF) for loans so as to fulfill campaign promises to its people.