Tariffs, Debt, Mistrust Slowing Development: UN
Tariffs applied by major economies, including the United States, have jumped this year from an average of 2.8 per cent to more than 20 per cent. “Uncertainty is the highest tariff possible,” she said. “It discourages investment, slows growth, and makes trade as a path to development much harder”
Chennai: The world economy is at a crossroads, as rising tariffs, record debt payments and growing mistrust put the brakes on development, finds the UN’s trade and development body.
The global economy is “being reshaped under pressure,” with the poorest countries bearing the heaviest costs, said UNCTAD Secretary-General Rebeca Grynspan.
Tariffs applied by major economies, including the United States, have jumped this year from an average of 2.8 per cent to more than 20 per cent. “Uncertainty is the highest tariff possible,” she said. “It discourages investment, slows growth, and makes trade as a path to development much harder”.
Further, developing countries paid a record $921 billion in interest in 2024, and 3.4 billion people now live in countries that spend more on debt service than on health or education.
“This is not a debt crisis, it is a development crisis. Markets are not in crisis – people are,” she said.
More than 50 developing economies devote at least 10 per cent of their tax revenues to interest payments, leaving little for schools, hospitals or infrastructure. Governments are forced into impossible choices: “default on creditors or default on their people”.
Artificial intelligence is projected to expand 25-fold in the next decade, reshaping trade, jobs and innovation. But the benefits remain uneven. In least developed countries, just one-third of people are online and digital services account for only 20 per cent of exports. UNCTAD has called for investment in infrastructure, data and skills, alongside global initiatives so that digital transformation becomes a driver of development, not division.
Gross Domestic Product (GDP) remains a main yardstick of economic performance, but it is no longer fit for purpose. “GDP counts oil spills and cigarettes. But not a mother caring for her child, or the Amazon rainforest unless it is cut down,” she said.
