High debt taking heavy toll on developing nations: UN

NEW YORK

Poorer nations are increasingly struggling to navigate the sluggish global economy, the UN has warned, calling for a fundamental rethinking of development strategies.

A report from the United Nations' trade and development agency UNCTAD highlighted how slow growth, soaring debt burdens, and weak investment and trade, were holding back developing countries.

The report, entitled "Rethinking development in the age of discontent", called for new policies and multilateral support to help developing countries overcome their challenges.

"Developing countries are taking a big impact after the pandemic and the cascading crisis that followed," UNCTAD chief Rebeca Grynspan told reporters.

The agency emphasised the emergence of a new "low normal" in global economic growth, with global GDP expected to rise just 2.7 percent this year and in 2025, down from an annual average of 3.0 percent between 2011 and 2019.

This stands in "stark contrast" to the 4.4 percent average growth seen between 2004 and 2007 ahead of the global financial crisis, it said.

And for developing countries, the slowdown is more dramatic, the report showed.

After growing 6.6 percent on average annually between 2003 and 2013, their average growth has fallen to just 4.1 percent in the past decade, it said.

At the same time, developing countries saw their debt burdens balloon by 70 percent between 2010 and 2023.

The report also cautioned that post-pandemic inflation, driven by supply chain disruptions and concentrated market power in key sectors like agriculture and energy, had significantly eroded purchasing power in developing countries especially.