Five years after the onset of the global financial crisis, the world economy remains in a state of disarray, according to a new report of the UN Conference on Trade and Development (UNCTAD).
In its overview of the global situation, UNCTAD says strong expansionary monetary policies in the major developed economies have not succeeded in fostering credit creation and strengthening aggregate demand.
It points out that fiscal austerity and wage compression in many developed countries are further darkening the outlook, not only for the short term, but also for the medium term.
And it notes that the burden of adjustment of the global imbalances that contributed to the outbreak of the financial crisis remains with the deficit countries, thus strengthening deflationary forces in the world economy.
According to UNCTAD, the dominance of finance over real economic activities persists, and may even have increased further. Yet financial reforms at the national level have been timid at best, advancing very slowly, if at all. Consequently, the outlook for the world economy and for the global environment for development continues to be highly uncertain.
UNCTAD says some developing and transition economies have been able to mitigate the impact of the financial and economic crises in the developed countries by means of expansionary macroeconomic policies.
But with the effects of such a response petering out and the external economic environment showing few signs of improvement, these economies are struggling to regain their growth momentum.
Donn Bobb, United Nations.
Duration: 1’25″
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