3rd Tokyo Global Dialogue - Contested Values, Technologies and Oceans: Intensifying US-China Competition and International Response
03 March 2022
Regional and Multilateral Responses
It is a great pleasure to be participating here with you, sharing this panel with such eminent thinkers and policymakers.
It is a pleasure to be participating in the 3rd Tokyo Global Dialogue. I want to make use of this opening statement to give a general picture of the state of the world economy from UNCTAD’s. I want to highlight FOUR trends affecting the world economy right now.
First.
Global inequalities have reached a tipping point. According to our data, developing countries have lost a total of 13 trillion dollars because of COVID-19 (including foregone income). And while in some advanced countries household disposable income increased during these last two years, fueling a boom in consumer spending that has overburdened global supply chains, world poverty is expected to increase by 200 million people, 80 million of which will fall into extreme poverty.
We must look back to the 1980s and 90s for a crisis as regressive as this one for the developing world. These inequalities are marked by gaps that were already too wide and got wider – in social security, health, gender equality, education, in the divide between formal and informal workers, between big and small businesses, between the offline and the online. And by new gaps that appeared – in vaccine equity, in fiscal packages, in debt stability.
To close them, the world needs to recover together. So far, we are recovering apart.
Second.
After decades of retrenchment, the state seems to be back in force as an actor of economic policy. Ambitious, far-reaching, and innovative industrial and productive policies are now a reality in every single region of the world, no matter the politics, marking a new balance between the market and the state.
From solar panels to microchips, from telecommunications equipment to electric cars, from artificial intelligence to aggrotech, from big data to infrastructure – key frontier sectors of the economy are being shaped backed by massive public investments.
According to our calculation, about 3.5 trillion dollars from recovery packages around the world are being earmarked for long-term investments. If we include private leverage, this number rises to 10 trillion. Much of this is skewed towards the developed world.
Third.
The pandemic saw important developments in the global financial ecosystem. We saw the largest ever emission of Special Drawing Rights, and important advancements in global debt governance, such as the Debt Suspension Initiative, and the Common Framework for Debt Treatment.
All these initiatives go in the right direction but are unfinished products. They lack the right quantum and ambition.
About 60% of all new SDRs (about 400 billion dollars) will probably go unused, because we lack an effective recycling mechanism, though there are many options at the table.
The DSSI was not renewed last year, which means that the world’s poorest countries will face almost 60 billion dollars in debt-service costs this year, more than twice as much as before the pandemic.
And the Common Debt Framework, provides an important precedent but is still very narrow in scope. Only Chad, Ethiopia, and Zambia) applied.
Fourth, lastly.
Trade itself is living a profound period of transformation, perhaps the greatest since the great trading boom of the 90s to the 2010s, when world trade volume doubled every five years.
The world is now getting ready for a global economy that is now more technological, more environment-concerned, and more regionally fragmented. Inventories, the quintessential gauge of uncertainty, are increasing everywhere. Many risks but also many opportunities loom.
According to our latest Global Trade Update, trade is growing at incredible rates following the 2020 downturn. Global trade grew by an unprecedented 25% last year. It is true part of this number is explained by base effects, but still global trade is now 13% higher than it was before the pandemic. Global trade has now reached the gigantic sum of 28.5 trillion dollars per year.
These have been the four trends I wanted to highlight. I look forward to your questions to get into more specifics. Thank you.
