The U.N. Conference on Trade and Development cautioned on Thursday that there is “a clear and present danger” of a global recession in 2020 due to trade tensions, corporate debt and weaker growth among both industrialized and developing nations.
The United Nations agency described its flagship Trade and Development Report for 2019 as a set of warning lights flashing around trade tensions, currency movements, corporate debt, a no-deal Brexit and inverted yield curves. It said there was little sign that policy makers are prepared for the economic storm ahead.
“Increased disagreements over trade rules, currency movements and technology flows are fostering uncertainty and instability, draining trust from the multilateral system at the very moment consensus and coordination are key to scaling up the resources needed to meet the massive economic, social and environmental challenges we all face,” Mukhisa Kituyi, UNCTAD’s secretary-general, said at the start of the 200-page report.
UNCTAD projected that global growth would fall to 2.3 percent in 2019, compared with 3 percent in 2018, with several big emerging economies, notably Argentina and Turkey, already in recession and some advanced economies, including Britain and Germany, already “dangerously close” to recession.
Trade growth was set to slow sharply in 2019 due to weakening global demand compounded by U.S. President Donald Trump’s imposition of tariffs on China and other trading partners. Trade growth dropped to 2.8 percent last year, and UNCTAD said it will likely edge closer to 2 percent this year.
Our new #TradeDevReport 2019 recasts the Depression era's signature policy on a global scale, a Global #GreenNewDeal, as the right policy framework to make a clean break with years of austerity and insecurity. https://t.co/BiqgHLkiSY pic.twitter.com/GyQpT4YxnE
— UNCTAD (@UNCTAD) September 26, 2019
Making the global economy great again
In the bigger picture, UNCTAD warned the global economy remains “excessively” fragile despite a decade of efforts at structural reforms since the global financial crisis that began in September 2008 when Lehman Brothers, a huge global bank, collapsed and nearly brought down the world’s financial system.
Kituyi recommended that leaders and governments worldwide focus on “rebuilding multilateralism around the idea of a Global Green New Deal” to address the world’s major environmental and climate crises, economic and social inequality and sustainable development challenges.
Such a deal must be based on public financing options, he said, as part of “a wider process of repairing the social contract on which inclusive and sustainable outcomes can emerge and from which private finance can be engaged on more socially productive terms.”
The report also urged policy makers to focus on job creation, better wages and public investment rather than their current “obsession with stock prices, quarterly earnings and investor confidence.”
Increasing green investments to 2.0 percent of global output or US$1.7 trillion a year would reduce carbon emissions and generate at least 170 million additional jobs, the report said.