Almost five years have passed since the global financial crisis, and the world economy is still reeling from its consequences. The main reason for this is the continued stagnation in developed countries, which is adversely affecting economic dynamism in other regions.
The global repercussions of the 2007-2008 financial crisis are a stark reminder of the economic interdependence in our globalising world. No country was spared from the shock waves that originated in the financial systems of developed economies.
The global economy weakened significantly towards the end of 2011 and further downward pressure emerged in the course of 2012. The growth rate of global output, which had already decelerated from 4.1 percent in 2010 to 2.7 percent in 2011, is expected to slow down even more in 2012 to around 2.3 per cent. Developed economies as a whole are likely to grow by only slightly more than one per cent in 2012, owing mainly to the recession currently gripping the European Union (EU).
Although it remains the fastest growing region, Asia is already experiencing an economic slowdown, with gross domestic product (GDP) expected to fall from 6.8 percent in 2011 to slightly below six percent in 2012. Several countries - including China, India and Turkey - have been adversely affected by weaker demand from developed countries.
In 2010, global biofuel production (bioethanol and biodiesel) reached 105 billion litres and is expected to almost double by 2020. Provided that oil prices remain relatively high which is likely the production of biofuels is expected to grow at double-digit rates for the next decade. Most of the biofuels produced are consumed at the national and local levels, with only seven percent of total production being exported. This reflects the fact that biofuels are mainly used for energy diversification and national energy security strategies.
In the past two decades, it has often been claimed that trade liberalization can, on balance, be a positive force for development. During this time, the Least Development Countries (LDCs) themselves became some of the most open economies in the world, based on the share of their exports in Gross Domestic Product (GDP). But greater opening of LDCs markets has not always benefitted all people in these countries, and the impact of trade reforms has affected their populations differentially.
Commodity producers are again reaping the benefits of high growth, particularly from high-demand importers, like China, and are increasingly formalising their integration into global commodity value chains. There is a growing recognition that, properly managed, resource rents can provide an important tool in the fight against poverty.
The multiple challenges now faced by the global community can perhaps be summed up in one word: imbalances. Imbalances in food, energy, housing and financial markets were allowed to grow during a sustained economic boom, becoming increasingly interdependent. These mounting imbalances generated a level of economic fragility which eventually shattered with the collapse of Lehman Brothers in September 2008. But despite the massive amount of public resources that have been mobilized to deal with the resulting collapse, the underlying forces have been left untouched in the aftermath of the crisis. They remain a toxic threat to stable and inclusive growth and the sustainability of the recovery.
This time last year, the global economy had reached the nadir of the financial and economic crisis. Since then, a succession of optimistic commentators, media reporters, economists and others has been pointing to the strength of the recovery: the resurgence in stock markets, the restoration of bank balances, and the reversals in growth rates. At the same time, data have emerged describing the full impact and cost of the crisis, particularly for developing countries, including an increase in unemployment, an additional 53 million people falling below the poverty line and over 100 million more going hungry.
The current financial and economic crisis drew attention away from the food crisis, but the latter still remains a threat to the achievement of the Millennium Development Goals (MDGs) and sends a warning of the dangers of low investment and poor policies in the agricultural sector.
In many respects, the diffusion of information and communication technologies (ICTs) continues to be a great development success story. Over the past four years we have witnessed dramatic growth in the use of various ICT applications, notably mobile phones. Developing-country populations now account for more than half of all Internet users. Improved connectivity has also enabled more firms to gain access to critical information, finance and knowledge -all key factors for enhancing competitiveness.
A major international conference on South-South cooperation is scheduled to take place early December in the Kenyan capital of Nairobi against the backdrop of a rising trend in regional economic integration in Asia, Africa, the Middle East and Latin America.
The current crisis has precipitated a significant downturn in world foreign direct investment (FDI) flows which over the past year has spread to all sectors and regions. 2008 marked the end of a growth cycle in international investment that began in 2003 and reached a historic high of nearly $2 trillion in 2007.
The attention of policymakers is being drawn to addressing fiscal policy and financial issues in an effort to close the credit crunch and release financial flows, especially investment.
Since the Great Depression of the 1930s, there have been more than 100 crises worldwide, says the secretary-general of the U.N. Conference on Trade and Development (UNCTAD), Dr. Supachai Panitchpakdi.