GENEVA: Developing countries are being choked by a hefty $31 trillion debt burden, severely constraining their economic growth, the United Nations warned on Monday, as a top trade official underscored the urgent need to preserve the global rules-based trading system to avoid a damaging tariff war.
Speaking at the UN Trade and Development (UNCTAD) meeting in Geneva, attended by representatives from its 195 Member States, UNCTAD Secretary-General Rebeca Grynspan emphasised the importance of upholding existing international trade rules.
She noted that 72 percent of global trade still operates under the framework of the World Trade Organisation (WTO), whose agreements are the foundation of international commerce.
Grynspan stressed that maintaining this system is vital for global economic stability and for protecting the interests of developing economies already strained by unsustainable debt levels.
“We have for now avoided the domino effect of tariff escalation that once brought the world economy to its knees in the 1930s,” Ms. Grynspan told UNCTAD members gathering in Geneva to continue efforts to lift millions out of poverty through trade.
“This didn’t happen by accident, it happened because of you, because you kept negotiating when it seemed pointless, defending a rules-based system even as you were to reform it, and building bridges even when they fell.”
The UNCTAD chief’s remarks come amid ongoing global economic uncertainty, following months of tariff threats and trade tensions involving the United States and its partners.
Rebeca Grynspan warned that rising tariffs, soaring debt repayments by heavily indebted countries, and increasing mistrust among nations are collectively stalling development efforts worldwide.
“A debt and development crisis is still facing countries with impossible choices,” she said. “They have to decide: to default on their debt or on their development.”
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, Ms. Grynspan recently told the UN General Assembly.
“Uncertainty is the highest tariff possible,” she said, adding that it “discourages investment, slows growth and makes trade as a path to development much harder”.
Speaking in Geneva, UNCTAD’s chief economist warned that global investment flows are declining for the second consecutive year, undermining future economic growth.
She pointed out that the current investment landscape disproportionately benefits wealthier nations, leaving developing countries at a disadvantage.
Freight costs were also highlighted as a major concern, with the UNCTAD Secretary-General stating that price volatility disproportionately impacts landlocked and small island developing states, where transport expenses can be up to three times the global average.
While artificial intelligence (AI) holds the potential to add trillions to global GDP, Grynspan noted that fewer than one in three developing countries have policies in place to harness its benefits.
Meanwhile, 2.6 billion people—mostly women in developing nations—remain offline, according to UN data.
Echoing these concerns, President of the UN General Assembly Annalena Baerbock added that developing nations faced a crushing $31 billion in debt last year alone.
Trust in the international system is also “eroding”, the UN General Assembly President continued.
She noted that even though the global economy is worth more than $100 trillion a year, one in two people have seen “little or no rise in their income for a generation.”
