Global economy will slow down in 2022

The growth in global real GDP will drop from 5.7 per cent in 2021 to 3.3 per cent in 2022, according to a report.

The report released by United Nations Conference on Trade and Development (UNCTAD) released today also shows that trade in both goods and services will slow down. “Growth in merchandise exports is expected to decline by half, from the strong 26.5 per cent increase recorded in 2021 to 13.8 per cent this year. “For services exports, which include transport and travel, the slowdown will be less pronounced – from 17.2 per cent to 14.6 per cent,” the Handbook of Statistics 2022 – the global reference for trade and development trends published each year – reads. 

Despite the strong growth in trade in services in 2021, the value of exports ($6.1 trillion) remained below their pre-Covid-19 levels ($6.3 trillion in 2019), it reads, adding that prices soared, especially for fuels, driving inflation. “The prices of primary commodities, such as food and energy, soared by 55 per cent in 2021.” Fuels accounted for 22 percentage points of the growth.

The upward trend continued this year, with prices hitting in August 2022 their highest levels in nearly three decades. Inflation also soared, especially in Africa, where consumer prices jumped by 22.7 per cent in 2021. Meanwhile, households in Latin America and the Caribbean saw prices rise by 15 per cent.

Likewise, trade surplus of developing economies also increased. “The trade surplus of developing economies grew, especially in Africa,” it reads, adding that the increase was mirrored by a widening trade deficit for developed economies. “Developing countries traded more with developed nations ($8 trillion) than among themselves ($5.4 trillion). Trade between developed nations was slightly higher at $8.5 trillion.”

The report also states that export diversification remains a challenge for developing countries. But the products that countries depended on varied across regions. Around three quarters of Africa’s exports consisted of primary goods (77 per cent), while developing economies in Asia and Oceania exported manufactured goods in nearly equal proportions (76 per cent).

Least developed countries fall short of growth targets, the report reads further. “The world's 46 least developed countries (LDCs) reported real GDP growth of only 2 per cent in 2021, less than half the global average of 5.7 per cent.”

GDP growth in LDCs fell far short of the 7 per cent annual per-capita growth target enshrined in the UN’s 2030 Agenda for Sustainable Development.

Likewise, population hits 8 billion while dependency rates increase. “The global population hit 8 billion in November 2022, even though growth has been declining since the late 1980s. In 2021, it stood at 0.87 per cent,” it adds. “Global dependency rates also increased among the population. On average, there are 54 dependent children or older people for every 100 workers. Africa has the highest dependency ratio at 72 per cent.”

The handbook provides in one report the key data and indicators on how the global economy has evolved – for regions, countries and sectors. It also provides projections based on real-time estimates – called nowcasts – to help governments anticipate ongoing shifts and improve policymaking.

“Timely and quality data are critical now more than ever as concurrent global crises test our resilience,” UNCTAD secretary-general Rebeca Grynspan said. “These statistics will help countries take evidence-based policy measures to cushion the blow of the global crisis on the most vulnerable.”

Without better productive capacities, poorest countries will remain margins of global economy

UNCTAD’s Least Developed Countries Report 2021 to be released next week is calling for increased investment in productive capacities and state capacity in least developed countries (LDCs), as the Covid-19 crisis and the emerging two-speed global recovery threaten to reverse many hard-won development gains in these countries.

"The development of productive capacities in LDCs is necessary for boosting their ability to respond to and recover from crises such as the pandemic, and to advance towards sustainable development," the report reads, adding that to achieve that, they need the decisive support of the international community to finance the immense investments required and to build technological capabilities.

The UN established the LDC category 50 years ago. The grouping of the world’s weakest economies has expanded from an initial 25 countries in 1971, peaking at 52 in 1991, and stands at 46 today, with only six countries having graduated – stopped being an LDC – to date.

Private sector suggests postponement graduation from LDC

The private sector has asked the government to postpone the graduation of Nepal to the Developing Country (DC) status from the current Least Developed Country (LDC) status.

Submitting a written recommendation to the Ministry of industry, Commerce and Supplies today, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Shekhar Golchha said that Nepal should not hurry to graduate from LDC. If Nepal graduates from LDC, it will not be able to enjoy the benefits including zero tariff and grants from the development partners. The developing country will get loan, and it will also be exempted from zero tariff, provided for LDCs by India, China, US and the EU. “Nepal will also not receive any development grants, if it graduates,” he said,” asking the government not to hurry.

Earlier too, Nepal had postponed its graduation from LDC till 2021, though the country had met two of the three criterion that are necessary to graduate to graduate from LDC. Nepal had fulfilled two criterion – Human Assets Index (HAI) and Economic Vulnerability Index (EVI) – in 2015, which was enough for graduation. The HAI should be 66 or above, EVI 32 and below, and per capita income should be $1,222. Nepal’s HAI and EVI scores stood at 68.7 and 26.8, respectively, which was enough for graduation from LDC, though the per capita income was less. But writing a letter to UNDP, Nepal asked to postpone its graduation as the country wanted to graduate on the basis of per capita income, which is thought to be more sustainable graduation. 

Any country meeting two of the three criterion – HVI, EVI and per capita income – could be graduated from LDC, or a country can graduate, fulfilling only one criteria, if it has $2,444 per capita income.  Nepal’s per capita income currently hovers around $1,000 but in the changed context of coronavirus pandemic, there is a doubt that the per capita income even remains same, as some 6 million Nepalis lost their employment, during the lockdown imposed by the government – from March 24 for 120 days – and subsequent prohibitory orders aimed at containing the spread of Covid-19.

According to the latest UNCTAD report on LDCs too, the world economic crisis brought by the Covid-19 pandemic may affect the previously planned graduation of LDCs that is the exit of some countries from the group of LDCs. 

The LDCs that have better weathered the Covid-19 pandemic from a health policy perspective are those with a broader and more sophisticated base of productive capacities in their economy, the UNCTAD report reads, adding that more generally, the same reasoning also applies to their capacity to respond to other shocks like medical, economic or natural disasters. “Countries that have been able to develop a denser and more diversified fabric of productive capacities have shown greater resilience and have been better prepared to weather different types of shocks.”

The Covid-19 pandemic is estimated to contract the GDP per capita LDCs by 2.6 per cent in 2020 from already low levels, as these countries are forecast to experience their worst economic performance in 30 years, according to the UNCTAD report. “At least 43 out of the 47 LDCs will likely experience a fall in their average income,” it reads, adding that extreme poverty in LDCs is projected to expand by 32 million in 2020 to reach 377 million people. “The poverty rate will rise from 32.5 per cent to 35.7 per cent in 2020, due to the Covid-19-induced economic crisis.”

Meeting the criterion is not only enough for any LDC to graduate, but it also has to prepare a transition plan, so that it keeps sailing above, otherwise, the country could again demoted to LDC. Nepal also has to prepare a transition strategy as it will lose some preferential treatment.

According to a report prepared by the National Planning Commission (NPC) and the United Nations Development Programme (UNDP) also, the Covid-19 pandemic may have profound impacts on the graduation criteria, with new risks of rising trade and export costs impacting external markets, and the need for more concessional aid, including debt relief, to overcome multiple crises. With new impact analysis, Nepal also need to bring a transitional strategy.

Graduation from LDC status becomes effective three years after the United Nations General Assembly (UNGA) takes note of the recommendation made by the Committee for Development Policy (CDP) under the United Nations Economic and Social Council (UNESC) to graduate a country. Though, the government is in hurry to graduate Nepal, Nepal’s graduation will be effective in 2024, if the committee recommends graduation at its next triennial review in 2021. 

Global foreign direct investment falls by 49 per cent

Global foreign direct investment (FDI) flows fell by almost half to 49 per cent in the first half of 2020 compared to 2019, due to the economic fallout from Covid-19, reveals UNCTAD’s latest Global Investment Trends Monitor released today.

In the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects. “The biggest drops occurred in developed countries, cutting across all major forms of foreign direct investment,” reads the latest Global Investment Trends Monitor.

“The FDI decline is more drastic than we expected, particularly in developed economies,” UNCTAD’s investment and enterprise director James Zhan said, adding that developing economies weathered the storm relatively better for the first half of the year. “The outlook remains highly uncertain.”

According to the report, developed economies saw the biggest fall, with FDI reaching an estimated $98 billion in the six-month period, a decline of 75 per cent compared to 2019. The trend was exacerbated by sharply negative inflows in European economies, mainly in the Netherlands and Switzerland. The FDI flows to North America fell by 56 per cent to $68 billion.

Meanwhile, the 16 per cent decrease in FDI flows to developing economies was less than expected, due mainly to resilient investment in China. Flows decreased by just 12 per cent in Asia but were 28 per cent lower than in 2019 in Africa and 25 per cent lower in Latin America and the Caribbean.

In the six months to June 2020, developing countries in Asia accounted for more than half of global FDI. Flows to economies in transition were down by 81 per cent due to a strong decline in the Russian Federation. “The decline cut across all major forms of FDI,” the report shows.

The report shows that cross-border merger and acquisition (M&A) values reached $319 billion in the first three quarters of 2020. The 21 per cent decline in developed countries, which account for about 80 per cent of global transactions, was checked by the continuation of M&A activity in digital industries.

The value of greenfield investment project announcements – an indicator of future FDI trends – was $358 billion in the first eight months of 2020. Developing economies saw a much bigger fall (by 49 per cent) than developed economies (by 17 per cent), reflecting their more limited capacity to roll out economic support packages.

The number of announced cross-border project finance deals declined by 25 per cent, with the biggest drops in the third quarter of 2020, suggesting that the slide is still accelerating. 

The report also reveals that prospects for the full year remain in line with UNCTAD’s earlier projections of a 30 per cent to 40 per cent decrease in FDI flows, the report indicates. “The rate of decline in developed economies is likely to flatten as some investment activity appeared to be picking up in the third quarter.”

Flows to developing economies are expected to stabilize, with east Asia showing signs of an impending recovery. The flows will hinge on the duration of the health crisis and the effectiveness of policy interventions to mitigate the economic effects of the pandemic. Geopolitical risks continue to add to the uncertainty. “Despite the 2020 drop, FDI remains the most important source of external finance for developing countries,” according to UNCTAD.

Global FDI stock stood at $37 trillion at the end of 2019.

UN conference to focus on protecting consumers and beyond Covid-19

 Ministers, senior government officials, heads of competition and consumer protection authorities and civil society representatives will examine how to safeguard consumers’ welfare amid and after the Covid-19 pandemic during the 8th United Nations Conference on Competition and Consumer Protection to be held from October 19 to October 23.

In the wake of the pandemic, governments have fought unfair practices such as price gouging and non-respect of refunds, and defended competition to protect consumers, prevent the distortion of markets and promote a healthy economic recovery. The quinquennial conference is the highest-level meeting on competition and consumer protection within the UN and UNCTAD is the only international organisation with quasi-universal membership dealing with these issues at the multilateral level.

The conference will focus on how to strengthen consumer protection and competition in the digital economy, the new frontier for these issues due to the surge of e-commerce during the pandemic.

In addition, the participants will discuss how to combat cross-border cartels and improve consumer product safety around the world, among other emerging and pressing concerns.

The participants will also deliberate on how to implement UN guidelines for consumer protection and competition, the only multilateral frameworks on these issues, to foster international cooperation, as most related challenges transcend borders. The sessions will be held both in person and virtually. More information on the sessions is available on the programme of the conference.

Covid-19 causes massive losses in global tourism sector

The coronavirus pandemic will lead to massive losses in the world’s tourism sector, which has been placed at a standstill for nearly four months, according to UNCTAD’s report, ‘Covid-19 and tourism: Assessing the economic consequences,’ to be released tomorrow.
The losses will rise significantly, dealing a huge blow to the global economy, if the break in international tourism lasts for a longer period, it reads, adding that this could have a significant impact on employment and wages, particularly in economies heavily dependent on tourism. “Tourism is a backbone of many countries’ economies and a lifeline for millions of people around the world, having more than tripled in value from $490 billion to $1.6 trillion in the last 20 years.”
But Covid-19 has brought it to a halt, causing severe economic consequences globally.
Prevailing lockdown measures in some countries, travel restrictions, reductions in consumers’ disposable income and low confidence levels could significantly slow down the sector’s recovery. Even as tourism slowly restarts in an increasing number of countries, it remains at a standstill in many nations.

Global trade set to plunge further

International trade in goods is expected to decline significantly in the coming months due to the coronavirus pandemic, according to the first edition of UNCTAD’s new quarterly newsletter entitled Global Trade Update to be released today.
The update provides a comprehensive snapshot of international trade and pressing issues that affect trade flows. “Trade in many developing countries is projected to take a nosedive in the second quarter of this year due to the unprecedented effects of the pandemic,” the update shows, adding that Covid-19 has severely hit the economies of developing and developed countries alike.
In April, developing countries in South Asia and the Middle East suffered the steepest decline in exports, while those in East Asia and the Pacific experienced the least reduction in exports, according to the latest figures. At the sectoral level, the pandemic has negatively impacted most sectors, it reads, adding that trade in automotive and energy products is among the worst affected in this second quarter. “Despite the bruising times, international trade has supported countries’ efforts to fight the pandemic and mobilized much-needed medical supplies.”

Covid-19 triggers marked decline in global trade: UNCTAD

The coronavirus pandemic cut global trade values by 3 per cent in the first quarter of this year, according to the latest UNCTAD data published in a joint report by 36 international organisations.
The downturn is expected to accelerate in the second quarter, with global trade projected to record a quarter-on-quarter decline of 27 per cent, according to the report by the Committee for the Coordination of Statistical Activities (CCSA).
The report is a product of cooperation between the international statistics community and national statistical offices and systems around the world, coordinated by UNCTAD.
“Everywhere governments are pressed to make post-Covid-19 recovery decisions with long-lasting consequences,” UNCTAD secretary-general Mukhisa Kituyi said, adding that those decisions should be informed by the best available information and data. I’m proud that UNCTAD has played a central role in bringing so many international organisations together to compile valuable facts and figures to support the response to the pandemic.
According to the report, the drop in global trade is accompanied by marked decreases in commodity prices, which have fallen precipitously since December last year.
UNCTAD's free market commodity price index (FMCPI), which measures the price movements of primary commodities exported by developing economies, lost 1.2 per cent of its value in January, 8.5 per cent in February and a whopping 20.4 per cent in March.
Plummeting fuel prices were the main driver of the steep decline, plunging by 33.2 per cent in March, while prices of minerals, ores, metals, food and agricultural raw materials tumbled by less than 4 per cent. The more than 20 per cent fall in commodity prices in March was a record in the history of the FMCPI. By comparison, during the global financial crisis of 2008, the maximum month-on-month decrease was 18.6 per cent.
At that time, the descent lasted six months. Worryingly, the duration and overall strength of the current downward trend in commodity prices and global trade remain uncertain. Before the Covid-19 pandemic sent international commerce into a tailspin, global merchandise trade volumes and values were showing modest signs of recovery since late 2019.
The UNCTAD now casts featured in the report incorporate a wide variety of data sources, capturing diverse determinants and indicators of trade, but the situation is changing rapidly.
“In this time of crisis, we are putting out the facts as we know them today. We’ll continue monitoring the global trade landscape as it evolves,” said UNCTAD's chief statistician, Steve MacFeely.
“I’m delighted the international statistical community could step up, mobilize quickly and publish such a useful and fascinating report. It was a great honour for UNCTAD to lead this endeavour.”
Next, UNCTAD will release a new monthly trade nowcast, which will provide quarterly nowcasts for merchandise trade. It is also revamping its existing Trade-in-Services bulletin that monitors the latest trends in global trade in services. Future editions will include a nowcast for the latest quarter

Global e-commerce hits $25.6 trillion: UNCTAD

E-commerce sales hit $25.6 trillion globally in 2018, up by 8 per cent from 2017, according to the latest available estimates released today by the UN’s trade and development body, UNCTAD, at the start of its UNCTAD eWeek event.
The online event will explore digital solutions and policies to help the world recover from the coronavirus crisis. It runs from April 27 to May 1 and features dialogues among ministers, heads of international organisations, business executives and civil society representatives.
According to the UNCTAD analysis, the estimated 2018 e-commerce sales value, which includes business-to-business (B2B) and business-to-consumer (B2C) sales, was equivalent to 30 per cent of global gross domestic product (GDP) that year.
"The coronavirus crisis has accelerated the uptake of digital solutions, tools and services, but the overall impact on the value of e-commerce in 2020 is still hard to predict,” said UNCTAD’s director of technology and logistics Shamika Sirimanne.
The 2017 value of global e-commerce was estimated at $23.8 trillion, based on a revised methodology.
The value of global B2B e-commerce in 2018 was $21 trillion, representing 83 per cent of all e-commerce, comprising both sales on online market platforms and electronic data interchange transactions. “B2C e-commerce was valued at $4.4 trillion, up by 16 per cent from 2017,” it reads, adding that cross-border B2C e-commerce sales amounted to $404 billion in 2018, representing an increase of 7 per cent over 2017. “The United States continued to dominate the overall e-commerce market as it remained among the top three countries by B2C e-commerce sales, alongside China and the United Kingdom.”
The leading B2C e-commerce companies are based mostly in China and the United States. The world’s top 10 B2C companies in 2018 generated almost $2 trillion in gross merchandise value (GMV), according to the report.
Alibaba (China) was far ahead with a GMV of $866 billion in 2018, followed by Amazon (United States) with $277 billion. However, in terms of revenue, JD.com (China) and Amazon were ahead of Alibaba.
Developing and transition economies accounted for about half of the top 20 economies by B2C e-commerce sales. In relation to GDP, B2C e-commerce in these economies was the largest in Hong Kong (China), China and the United Kingdom, and smallest in India, Brazil and Russia.
Among the top 20 economies, the extent to which Internet users engage in online purchases varies considerably. For example, in 2018, 87 per cent of Internet users in the United Kingdom shopped online, compared with only 14 per cent in Thailand and 11 per cent in India. “More than 1.4 billion people shopped online and more bought from abroad,” it reads.
UNCTAD estimates that 1.45 billion people, or one quarter of the world’s population aged 15 and older, made purchases online in 2018, which is 9 per cent higher than in 2017. China had the largest number of online shoppers at 610 million, according to the report. While the bulk of online shoppers mainly bought from domestic suppliers, some 330 million online shoppers made cross-border purchases in 2018, a little more than one in five of all online shoppers.
The interest in buying from foreign suppliers continued to expand. The share of cross-border online shoppers to all online shoppers rose from 17 per cent in 2016 to 23 per cent in 2018.
“Still the number of online shoppers, while huge, is an indication of the scale of the digital divide and the future market potential of e-commerce, both of which need to be addressed,” Sirimanne added.
Today only half of the world’s 7.7 billion people are connected to the internet and its benefits. This limits the ability of many developing countries to use digital solutions to cope with the current health and economic crisis.

UN Agency proposes global debt deal

The UN trade and development body today set out urgent measures needed to head off a looming debt disaster in developing countries reeling from the economic fallout from the coronavirus pandemic.
UNCTAD released a report that calls for a global debt deal for the developing world. It underlines the vital need for decisive action to provide substantive debt relief to developing countries to free up sorely needed resources to respond to the raging pandemic.
On March 30, UNCTAD called for a $2.5 trillion coronavirus crisis package for developing countries. Even prior to the Covid-19 crisis, many of these countries faced high and rising shares of their government revenues going to debt repayments, squeezing health and social expenditures. “The international community should urgently take more steps to relieve the mounting financial pressure that debt payments are exerting on developing countries as they get to grips with the economic shock of Covid-19,” said UNCTAD secretary-general Mukhisa Kituyi.
The coronavirus pandemic hits developing economies at a time when they had already been struggling with unsustainable debt burdens for many years, as well as with rising health and economic needs.
According to the report, developing countries now face a wall of debt service repayments throughout the 2020s. In 2020 and 2021 alone, repayments on their public external debt are estimated at nearly $3.4 trillion – between $2 trillion and $2.3 trillion in high-income developing countries and between $666 billion and $1.06 trillion in middle- and low-income countries.
The financial turmoil from the crisis has triggered record portfolio capital outflows from emerging economies and sharp currency devaluations in developing countries, making servicing their debts more onerous. “Recent calls for international solidarity point in the right direction,” said director of UNCTAD’s globalisation division, Richard Kozul-Wright, who produced the report, “but have so far delivered little tangible support for developing countries as they tackle the immediate impacts of the pandemic and its economic repercussions.”
UNCTAD outlines three key steps to translate the calls into action:
Step 1: Automatic temporary standstills: Such standstills would provide macroeconomic ‘breathing space’ for all crisis-stricken developing countries requesting forbearance to free up resources, normally dedicated to servicing external sovereign debt. The standstills, if long and comprehensive enough, would facilitate an effective response to the Covid-19 shock through increased health and social expenditure in the immediate future and allow for post-crisis economic recovery along sustainable growth, fiscal and trade balance trajectories.
Step 2: Debt relief and restructuring programmes : The programmes would ensure the ‘breathing space’ gained under the first step is used to reassess longer-term developing country debt sustainability, on a case-by-case basis.
On April 13, the IMF cancelled debt repayments due to it by the 25 poorest developing economies for the next six months. This debt cancellation is estimated at around $215 million.
On 15 April, leaders of the Group of 20 leading economies (G20) announced the suspension of debt service payments for 73 of the poorest countries from May to the end of this year.
However, more systematic, transparent and coordinated measures towards writing off developing country debt across the board are urgently needed, the report says, suggesting that a trillion dollar write-off would be closer to the figure needed to prevent economic disaster across the developing world.
Step 3: An international developing country debt authority : To take the first two steps forward, the UNCTAD report proposes the establishment of an International Developing Country Debt Authority (IDCDA) to oversee their implementation and lay the institutional and regulatory foundations for a more permanent international framework to guide sovereign debt restructurings in future.
This could follow the path of setting up an autonomous international organisation by way of an international treaty between concerned states. Essential to any such international agreement would be the swift establishment of an advisory body of experts with entire independence of any creditor or debtor interests.

New UNCTAD nowcast shows international trade, global economy cooling down

After a continued surge last year, global trade and economic output have stagnated this year, according to UNCTAD's nowcast published today in the 2019 Handbook of Statistics.
Merchandise trade is predicted to drop by 2.4 per cent to $19 trillion, after significant growth rates in 2018 (9.7 per cent) and 2017 (10.7 per cent). Trade in services is predicted to only increase by 2.7 per cent to $6 trillion, a considerable deceleration from 7.7 per cent in 2018 and 7.9 per cent in 2017.
Real global economic output – gross domestic product – is now expected to grow by 2.3 per cent this year, 0.7 percentage points less than last year. “We see consistency across a range of indicators, the global economy is slowing," said UNCTAD’s chief statistician Steve MacFeely.
Last year, world merchandise trade increased by 2.3 per cent in volume terms. The 9.7 per cent increase in values could to a large extent be attributed to changes in prices. For example, fuel prices recorded substantial growth, year-on-year, during all the months of 2018, a trend that was reversed at the beginning of 2019, as UNCTAD's free market commodity price index shows.
Maritime transport lost momentum in 2018. World seaborne trade volumes rose by only 2.7 per cent, compared with 4.7 per cent in 2017, and port container traffic grew by 4.7 per cent, two percentage points less than the year before.
UNCTAD's 2019 Handbook of Statistics depicts these and other major trends in statistics relevant to international trade and development, summarising the broad spectrum of statistics maintained in the online database UNCTADstat.
"The handbook is designed to supply a broad range of users, from all regions of the world and working in different domains, be they policymakers, businesses, researchers, journalists or the person on the street who is interested in global economic and social affairs, with high-quality, impartial and easily readable information on latest trends and patterns,” MacFeely said.
The handbook boasts numerous maps, figures, infographics and tables, accompanied by descriptive text, all of which reveal interesting, sometimes curious, recent developments, such as foreign direct investment from the US turning into negative in 2018. It also shows the rising merchandise trade deficit of the developed economies as a group since 2016 and a growing spread of the world supply of manufactured goods by exporting economies over the last two years.
The 2019 edition also extends to new domains, such as statistics on port calls and the time ships spent on ports.

LDCs must undergo structural transformation

The United Nations Conference on Trade and Development (UNCTAD) has suggested that least development countries (LDCs) must proactively ensure that external finance generated from all sources must be directed to national development priorities. It further said that it is the best way to manage their aid dependency and eventually escape from it. The report has also suggested that LDCs must undergo structural transformation to achieve Sustainable Development Goals (SDGs).
Releasing the global ‘LDCs Report’ today, UNCTAD has pointed out that aid-dependent countries have to rely on external finances due to low domestic savings, among other factors. “For LDCs to attain the SDGs and escape aid dependency, they need external finance that is targeted at the structural transformation of their economies,” quoted UNCTAD secretary-general Mukhisa Kituyi in the report.
According to the report, LDCs like Nepal should take ownership of their development agenda and manage the allocation of external development finance in alignment with their national development priorities. “The international community also needs to step up its support towards this common goal,” the report reads.
The report has also suggested that LDCs need to utilise official development funds in a manner that will help leverage private funds through blended finance, or public-private partnership. “The number of players in external financing has increased, with emerging developing country donors, non-profit organisations, and private commercial sources entering the field.” However, it has mentioned that it will increase complexity of the financing system.
According to the report, LDCs need to mobilise and allocate the financing required for long-term investment in new productive sectors and activities, as well as the investments undertaken for the technological and organisational upgrading of existing sectors and producing units.
They should also establish and strengthen institutions necessary to undertake the financial analysis and planning and coordination for structural transformation, as well as those responsible for mobilisation of domestic financial resources, report reads.
Releasing the report in Nepal, resident representative of United Nations Development Programme (UNDP) Ayshanie Medagangoda-Labe said that Nepal needs to receive more external sources and finance to achieve SDGs as well as to graduate from the LDC status. “Critically, the linkage between external development finance and national development priorities is weakening,” she said, adding that the funding diversity has not translated into meaningful increase in development finance from all sources. “Rather it has expanded the number of actors and instruments.”
The report has also laid emphasis on the need for LDCs to strengthen state capacity, aid effectiveness agenda and manage development finance better. It also mentions that bold international actions are needed for the effective implementation of the agendas.
UNCTAD has, meanwhile, urged the international community to take action at the bilateral and multilateral levels to reinforce measures by LDCs at the domestic level and to address systemic issues of the international financial architecture that affect LDCs’ access to development finance.
The report has identified the present and future of external development finance and new challenges. Structural transformation, SDGs and external development finance, official flows, evolving terms of development aid and private development cooperation and exter nal development finance, fiscal space, and lack of alignment with national development goals are also needed for meeting the agendas set for LDC.

Sustainable mobility could connect 1 billion people, increase GDP by 2.6 trillion, cut 1.9 gigatons of CO2

The Sustainable Mobility for All (SuM4All) initiative launched today the Global Roadmap of Action toward Sustainable Mobility (GRA), a tool to guide country decision-makers on ‘how to’ achieve mobility that is efficient, accessible, safe and green.
The event brought together global leaders in the sector to discuss country and city actions for achieving greener, safer, more efficient, and equitable mobility. The GRA follows the 2017 launch of Global Mobility Report, the first-ever global assessment of the transport sector across all modes.
With growing urbanisation, increasing world trade and new technologies, the global mobility system is stressed. More than 1 billion people, or one-third of the global rural population, lacks access to all-weather roads and transport services, a major barrier to social and economic advancement. The GRA will help tackle this urgency by taking a holistic approach of sustainability and offering concrete policy solutions countries can adapt and adopt to achieve sustainable mobility.
As a tool, the GRA helps countries identify gaps, crucial steps, and appropriate policies to ensure that transport contributes to attain the Sustainable Development Goals (SDGs) by 2030 and improve the sustainability of their transport system.
According to the GRA, globally, one billion more people would be connected to education, health and jobs if we close the transport access gap in rural areas, improvements in border administration, transport and communication infrastructure could increase global GDP by up to $2.6 trillion and an additional 1.6 billion people would breathe cleaner air, if transport pollution was halved.
“The current mobility system takes a heavy toll on our planet and leaves many people behind. In most cases, it is also expensive, inefficient, and unsafe,” Programme Manager of SuM4All and World Bank Lead Economist Nancy Vandycke said, adding that the GRA is the first comprehensive effort to look across the four policy goals of accessibility, efficiency, safety, and green mobility for all modes of transport with a focus on action. “It serves as an important tool for policymakers to act now and turn the vision of sustainable transport into a reality.”
“Global challenges call for global solutions and making freight transportation sustainable is no exception,” secretary-general of UNCTAD Mukhisa Kituyi said, adding that multilateral approaches underpinned by a shared vision, a sense of community and multi-stakeholder collaboration, are the ultimate safeguard against impractical solutions that distort the playing field while leaving behind the most vulnerable and the weakest. “Achieving freight transportation systems that are truly economically efficient, environmentally sound and socially inclusive would otherwise be impossible.”
The GRA report is the outcome of more than 18 months of work by 55 influential organisations, 180 experts, and consultations with 50 public decision makers and 25 private corporations. SuM4All is an umbrella platform supported by 55 public and private organisations with a shared ambition to transform the future of mobility.

Trade costs of non-tariff measures now more than double that of tariffs: UN report

While applied tariffs in the Asia-Pacific region have halved over the past two decades, the number of non-tariff measures (NTMs) – policy regulations other than tariffs affecting international trade – has risen significantly, according to a new report launched today by the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP) and the United Nations Conference on Trade and Development (UNCTAD).
The Asia-Pacific Trade and Investment Report 2019 (APTIR) finds that NTMs are now affecting around 58 per cent of trade in Asia and the Pacific. One reason for the rise of NTMs is their growing popularity as weapons of trade policy in regional and global trade tensions. This can include government procurement limitations, subsidies to export and import restrictions as well as import and export bans through unilateral or multilateral sanctions. Meeting these complex and often opaque rules can require significant resources, affecting in particular small and medium-sized enterprises.
However, the report also notes that NTMs as policy instruments can often be legitimate. Most of the NTMs are technical regulations, such as sanitary and phytosanitary requirements on food. The average cost of these measures alone amounts to 1.6 per cent of gross domestic product, roughly $1.4 trillion globally. But they also serve important purposes such as protection of human health or the environment; and can even boost trade under certain conditions.
“While trade costs associated with NTMs are estimated to be more than double that of tariffs, NTMs often serve important public policy objectives linked to sustainable development,” said UN under-secretary-general and executive secretary of ESCAP Armida Alisjahbana.
“The key is to ensure they are designed and implemented effectively so that costs are minimized,” she added.
“The key is to ensure that while public policy objectives and further, Sustainable Development Goals are met, traders are not unnecessarily burdened and trade costs are minimised,” said secretary-general of UNCTAD Mukhisa Kituyi.
While costly to traders, failure to have essential technical NTMs in place or their poor implementation may have serious detrimental impacts on sustainable development. For example, the report refers to the lack of NTMs covering illegal fishing and timber trade in many Asia-Pacific economies. It also points to the high economic costs for the region associated with the African swine fever epidemic, which can be linked to deficient implementation of NTMs. At the same time, new regulations on trade in plastic waste arising from amendment to the Basel Convention are promising.
NTMs are often very different between countries, making it difficult for firms to move goods from one country to another. Regulatory cooperation at the regional and multilateral level and the use of international standards when designing or updating NTMs is therefore important in overcoming challenges related to the heterogeneity of regulations.
Looking ahead, the report also highlights that trade costs of NTMs can be significantly reduced by moving to paperless trade and cross-border electronic exchange of information. This could lower costs by 25 per cent on average in the region, generating savings for both governments and traders of over $600 billion annually.
The Asia-Pacific Trade and Investment Report is published biennially to provide insights into the impacts of recent and emerging developments in trade and foreign direct investment on countries’ abilities to meet the challenges of achieving sustainable development. The 2019 Report was prepared by ESCAP in collaboration with UNCTAD.

Successful digital women entrepreneurs at UN assembly

Five successful women entrepreneurs, who have broken new digital ground and created wealth and employment in various developing countries will be unveiled on the margins of the 74th session of the UN General Assembly in New York next week.
They will join world leaders as they review the progress made in the implementation of the 2030 Agenda for Sustainable Development Goals (SDGs).
UNCTAD will announce the first ‘eTrade for Women Advocates’, seven ‘super’ women – all digital entrepreneurs – who have been selected by the UN to inspire other digital women entrepreneurs and help ensure that women have a seat and voice at the policy making table for a more inclusive local, regional and global digital economy.
Five of the seven advocates – hailing from China, Côte d'Ivoire, Indonesia, Iran, Mexico, North Macedonia and Rwanda – will be introduced to the world, on the sidelines of the General Assembly. The ‘eTrade for Women Advocates’ will be in New York from September 23 to 26 to provide insights on how women digital entrepreneurs are a formidable force for inclusive wealth creation and development.
The five, who will be in New York are founder and chief executive of Rogrand Xiaofei Yao from China, founder and chief executive of Quickcash Patricia Zoundi Yao from Côte d'Ivoire, founder and chief executive of Javara Helianti Hilman from Indonesia, co-founder and chief operating officer of Kichink Claudia de Heredia from Mexico, and North Macedonia’s minister of finance and co-founder of Grouper.mk Nina Angelovska. The other two are founder and chief executive of Takhfifan Nazanin Daneshvar from Iran and founder and chief executive of DMM.HeHe Clarisse Iribagiza from Rwanda, according to a press note issued by the UN.
Drawing on their groundbreaking work in e-commerce, these advocates are helping to create the world we want by 2030 by leveraging technology to build wealth in their communities to meet the UN Sustainable Development Goals. The ‘super seven’ pioneering cohort of women entrepreneurial business leaders will inspire and empower other women entrepreneurs in their regions and beyond to take greater advantage of the ever-expanding global digital economy.
Harnessing the positive impact of digital technology, combined with the transformative power of female entrepreneurship, is needed to accelerate wealth creation and poverty reduction in developing countries. However, this potential remains unrealized as women struggle to scale their business and to get a seat at decision-making tables.
UNCTAD’s eTrade for Women initiative enables leading female digital entrepreneurs to make their voices heard in high-level political decision-making processes. It also equips them to empower the next generation of female entrepreneurs in developing countries.

Commodity-dependent developing countries need financial and technical support

Economic and export diversification is the best response to the challenges posed by climate change in developing countries that depend on commodities, according to UNCTAD’s Commodities and Development Report 2019.
The diversification could be horizontal, which entails venturing into new goods and sectors to reduce dependence on a narrow range of commodities, or vertical, which involves moving the value chain of a commodity up to increase its worth, says the report ‘Commodity Dependence, Climate Change and the Paris Agreement’.
According to the report, a successful diversification strategy will likely include a combination of horizontal policies, such as strengthening human capital through investments in education and health, and targeted measures to promote individual sectors.
“The climate crisis poses an existential threat to commodity-dependent developing countries and will result in the collapse of some economies if decisive action is not taken now,” UNCTAD secretary general Mukhisa Kituyi said, adding that now more than ever before, these countries need to assess their diversification potential and reduce their commodity dependence, which for decades has kept them exposed to volatile markets and climate change.
Although commodity-dependent developing countries contribute only modestly to climate change, the climate crisis puts them at most risk. They are more vulnerable primarily because they are economically dependent on sectors that are highly exposed to extreme weather events, the report reads. “Small island developing states (SIDS) are among the worst affected.”
Rising sea surface temperatures pose significant risks to the SIDS that derive a large share of their merchandise export earnings from fisheries, such as Kiribati (88 per cent in 2013–2017), Maldives (79 per cent) and the Federated States of Micronesia (75 per cent).
The negative effects of climate change on crop and fisheries production are more severe in low-latitude regions, where most commodity-dependent developing countries are located, the report observes.
Equally at risk are high-income, fossil-fuel-dependent countries, such as Brunei Darussalam, Kuwait and Qatar, which have some of the highest levels of greenhouse gas emissions per capita. They could be profoundly affected by the stranding of their major natural resource as a result of the growing push towards greener sources of energy, the report adds.
The report also underscores that the high risk faced by commodity-dependent developing countries reinforces their need to adapt, diversify and modernise their economies. They must also adapt to the effects of the climate response measures undertaken by other countries, which are expected to reduce the demand for some key commodities on which they depend.
Tackling climate change presents some opportunities to commodity-dependent developing countries, according to the report that also notes that the global push towards renewable energy and energy efficiency creates opportunities in countries with large reserves of materials used in clean technologies, such as solar photovoltaic cells, wind turbines and electric vehicle batteries.
Fighting climate change could also create opportunities to boost production of alternatives to cattle meat and milk, the report says. It points out the case of livestock in some drylands in Africa, where increased drought frequency and declining feed availability have encouraged pastoralists to adopt camels to supplement or replace cattle.
According to the report, the quest for climate mitigation and adaptation has spurred investments in technological innovations that could benefit commodity-dependent countries. One example is the adoption of cost-efficient solar photovoltaic cells, which could bolster energy security and support commodity sectors in remote areas that are not connected to national power grids.
The report echoes warnings from experts that commitments made by countries to mitigate climate change under the Paris Agreement are not ambitious enough. The commitments need to quadruple to limit global temperature rise to 1.5°C above pre-industrial levels, the report notes, making clear that adopting a higher ambition in the implementation of countries’ climate commitments will require stronger political will and greater mobilisation of financial and human resources. “It underlines that climate-related funding, which is currently only a fraction of actual requirements, needs to be substantially scaled up given the high cost of climate change mitigation and adaptation.”
For example, the total cost of implementation of climate action plans for 80 developing countries that have specified their financing needs is estimated at $5.4 trillion, the report notes. “This is the order of magnitude of the total amount spent on energy subsidies every year in the world.”
In addition, the report states that greening fiscal policies can help to ensure taxes, subsidies and similar policy instruments contribute to the implementation of climate action plans and the achievement of the sustainable development goals. It suggests reforming fossil fuel subsidies to further green fiscal policies. It is estimated that the wealthiest 20 per cent of households in developing countries receive 43 per cent of the benefits from fossil fuel subsidies, while the poorest 20 per cent get only 7 per cent.
Also, the capacities of commodity-dependent developing countries to undertake climate actions need to be strengthened, according to the report. This includes building technical and regulatory capacities to design institutions and implement policies to support mitigation and adaptation strategies.
Further, developed countries need to meet their commitment under the Paris Agreement to transfer environmentally friendly technologies to developing countries to help them effectively participate in global efforts to mitigate and adapt to the climate crisis.

Global e-commerce sales surges

Global e-commerce sales grew by 13 per cent in 2017, hitting an estimated $29 trillion, according to the latest numbers released today by UNCTAD.
A similar surge was seen in the number of online shoppers, which jumped by 12 per cent and stood at 1.3 billion people, or one quarter of the world’s population. Though most internet buyers purchased goods and services from domestic vendors, the share of those buying from abroad rose from 15 per cent in 2015 to 21 per cent in 2017. The growth was driven mainly by an increase in the United States.
As a result, cross-border business-to-consumer (B2C) sales reached an estimated $412 billion, accounting for almost 11 per cent of total B2C e-commerce –a 4 per cent hike on the previous year’s numbers. “The new figures show that e-commerce is indeed creating export opportunities,” UNCTAD secretary-general Mukhisa Kituyi said.
“But the question from a development standpoint is whether businesses in developing countries are prepared to seize the opportunities,” he said, adding that this will be discussed at next week’s eCommerce Week, held from April 1 to 5 at the United Nation’s European headquarters in Geneva, Switzerland.
Little change occurred in the list of the top ten e-commerce markets, with the United States holding on to its top position. At almost $9 trillion, online sales there were three times higher than in Japan and more than four times higher than in China.
The only shuffle in the list was Germany’s overtaking of the Republic of Korea as the fourth largest online market.
While business-to-business (B2B) e-commerce continued to dominate – accounting for 88 per cent of all online sales – B2C was the segment that saw the most growth, increasing by 22% to reach $3.9 trillion in 2017.
In the B2C realm, China increased its lead on the United States, while the United Kingdom held on to third place. But UK consumers were still the most likely to shop on the internet, with a whopping 82 per cent of people aged 15 and older making purchases online in 2017. Overall, however, China had the largest number of internet buyers at 440 million.

Creative economy bucks the trend

Global trade in creative goods is expanding with average export growth rates of more than 7 per cent, according to a new UNCTAD report outlining trends in the global creative economy.
The report, which includes sector-level profiles for 130 developed and developing countries, also charts China’s remarkable rise in the trade of creative goods. China accounts for more than one-third of global art sales at auction. Its film production is set to soar, and it contributes a significant portion to global trade of design products such as furniture, fashion and jewelry.
“The creative economy has both commercial and cultural worth,” Pamela Coke-Hamilton, who directs UNCTAD’s trade division, said. “Acknowledging this dual value has led governments worldwide to expand and develop their creative economies as part of economic diversification strategies and efforts to stimulate economic growth, prosperity and well-being.”
The data, which covers the period 2002 to 2015, shows the creative economy’s contribution to world trade. Over this period, the value of the global market for creative goods doubled from $208 billion in 2002 to $509 billion in 2015.
For the first time, the economic contribution of creative services, not just goods, is also measured at country level in the report, 'Creative Economy Outlook: Trends in International Trade in Creative Industries.'
"Within the creative economy, the creative industries generate income through trade and intellectual property rights, and create new opportunities, particularly for small and medium-sized enterprises,” Coke-Hamilton added.
The creative industries – including architecture, arts and crafts, marketing and advertising, media and publishing, research and development, software, computer games, and other core creative work – are the lifeblood of the creative economy.
Design and visual arts are among the highest performing sectors with fashion, interior design and jewelry accounting for 54 per cent of creative goods exports.
“Although the downturn in global trade has impacted all industries, the report shows the creative economy is more resilient than most,” the chief of UNCTAD’s creative economy programme, Marisa Henderson said, adding that the performance of the creative economy is encouraging and shows it is thriving through the intersection of culture, technology, business and innovation.
China is the biggest single exporter and importer of creative goods and services. It is the main force behind the creative economy boom over the past 13 years and owns a large portion of it. China’s trade in creative goods between 2002 and 2015 has been exponential with average annual growth rates of 14 per cent. "In 2002 China’s trade in creative goods was $32 billion and by 2014 the figure had increased more than fivefold, tallying $191.4 billion. There was a drop off in 2015 where China recorded a $168.5 billion trade in creative goods, but comparatively, China has maintained the dragon’s share of the trade in creative goods."
In 2015 Chinese exports were four times that of the United States.
The new data shows that Asia outstripped all other regions with China and South East Asia combined accounting for $228 billion of creative exports, almost double that of Europe.
China, Hong Kong (China), India, Singapore, Taiwan Province of China, Turkey, Thailand, Malaysia, Mexico and Philippines were the top 10 performing developing economies stimulating global trade in creative goods. Among developed economies, the US, France, Italy, the UK, Germany, Switzerland, Netherlands, Poland, Belgium and Japan were the top 10 creative goods exporters.

LDCs must nurture dynamic business to create jobs

Least Developed Countries (LDCs) including Nepal must prioritise dynamic enterprises and enact policies to help them thrive, create jobs, innovate and transform the economy, according to a report.
The report ‘The Least Developed countries Report 2018: Entrepreneurship for Structural Transformation’ released today by UNCTAD also calls for the LDCs to nurture dynamic businesses that create jobs and help end poverty.
Subtitled Beyond Business as Usual, the report looks at the conditions for creating and growing high-impact businesses in the LDCs – a group of 47 nations that includes most of sub-Saharan Africa, some Asian countries, and several island states – and establishes a more active stance for the state in steering the emergence of dynamic and transformational local entrepreneurship.
According to UNCTAD secretary-general Mukhisa Kituyi, "By encouraging policymakers to value the benefits of entrepreneurship, the report makes an invaluable contribution to efforts to add value to the LDCs’ implementation of the 2030 Agenda for Sustainable Development.”
Several structural features of the economies of LDCs tend to weaken entrepreneurship and the growth of enterprises, including limited finances, insufficient infrastructure, lack of institutions, poverty, restrictions on women’s empowerment, high registration costs, and elevated political, economic and environmental risks, according to the report. "The result is that most firms in LDCs are micro-or small enterprises and 58 per cent of the formal firms have at most 20 employees."
The report says that large numbers of people in LDCs are forced into small-scale, low-value entrepreneurship by necessity. Entrepreneurship is dominated by self-employment – which accounts for 70 per cent of total employment – informal micro- and small enterprises with low chances of survival and growth and little propensity to innovate.
Small companies account for 58 per cent of all firms in these countries.
The report also reveals that the vast majority of entrepreneurs in LDCs are 'necessity-driven'. There are 1.7 times as many early-stage entrepreneurs in LDCs on average who describe themselves as 'opportunity-driven' than there are who say they are 'necessity-driven', compared with 2.8 times as many in other developing countries.
The report says that governments in LDCs – a group that qualifies for preferential treatment in world trade and climate-change arrangements due to chronic disadvantages that leave them among the world’s poorest nations – should therefore focus on boosting entrepreneurs and established firms that seize opportunities to create innovative products and services, employ more people and grow dynamic businesses that have a transformative, ripple effect throughout the economy.
Fostering the type of enterprises that matters for root-and-branch economic transformation means going beyond the 'business-as-usual' approach of establishing an enabling environment for business, correcting market failures, and supporting small enterprises.
"Importantly, the report calls upon the least developed countries not to overlook the pivotal and complementary role played by large enterprises, alongside medium-sized and smaller enterprises, with a view to formulating deliberate strategies to nurture entrepreneurship that has impact,” Dr Kituyi said.
While at least 20 out of the 47 LDCs have national industrial policies that articulate to a various extent the interface between entrepreneurship and structural transformation, the report reveals that much less attention is currently devoted to the determinants of entrepreneurship.
The report calls for a renewed 'developmental state' that engages in transformative, mission-oriented investments and involves the private sector in a strategic vision that charts a clear path for development.
Policymakers should provide support that is tailored to the life cycle of firms – start-up, scale-up, maturity – based on objective selection criteria and linking clearly communicated time-bound rewards, advantages and incentives to performance. Entrepreneurship policies need also to foster linkages between firms of different sizes, stages of maturity and sectors, for instance by means of business clusters, networking and alliances which allow for a sustained flow of new ideas into firms throughout their life cycle and enable dynamic growth.
Greater attention needs to be given to the development of domestic supply chains, since linking LDCs to global value chains has not provided any significant boost to local enterprise development.
Coherence and coordination between entrepreneurship policies, industrial policies, rural policies and policies for science, technology and innovation are also critical, as is entrepreneurship skills development in education.
The report also recommends for a pragmatic, strategic and evolutionary approach to increase public-sector capabilities, enact locally-appropriate institutional reforms, build on centres of excellence, promote policy learning and nurture coalitions for change.
Briefing the press in the capital about the report, former vice chair of National Planning Commission (NPC), Swarnim Wagle said that the LDCs including Nepal have not been able to create conducive environment to link themselves to global supply chains. "Global value chains (GVCs) have tightened the conditions for LDC local entrepreneurship," he said, adding that it’s harder competition for many of these countries. "LDCs need to strategically reframe policy to unlock GVC potential opportunities."
He further stated that if Nepal wants to graduate to the league of developing nations then the country needs to promote entrepreneurship among the youths based on the spirit of the SDGs. Also speaking at a panel discussion, founders of some start-ups including Tootle and Khaalisisi said that scaling up their businesses has been a major challenge for them. 

Trade war threatens outlook for global shipping

Seaborne trade expanded by a healthy 4 per cent in 2017, the fastest growth in five years, while UNCTAD forecasts similar growth this year, according to its Review of Maritime Transport 2018. Volumes across all segments are set to grow in 2018, with containerised and dry bulk commodities expected to record the fastest growth at the expense of tanker volumes.
The 2018 edition of the UNCTAD Review of Maritime Transport, marking its 50th year of publication, was launched at the Global Maritime Forum’s Annual Summit taking place in Hong Kong on October 3-4.
"While the prospects for seaborne trade are positive, these are threatened by the outbreak of trade wars and increased inward-looking policies,” UNCTAD secretary-general Mukhisa Kituyi said, adding that escalating protectionism and tit-for-tat tariff battles will potentially disrupt the global trading system which underpins demand for maritime transport.
The warning comes against a background of an improved balance between demand and supply that has lifted shipping rates to boost earnings and profits. Freight-rate levels improved significantly in 2017 – except in the tanker market – supported by stronger global demand, more manageable fleet capacity growth and overall healthier market conditions.
Supply-demand improvements, namely in the container and dry bulk shipping segments, are expected to continue in 2018. Freight rates may benefit accordingly, although supply-side capacity management and deployment remain key. UNCTAD projects an average annual growth rate in total volumes of 3.8 per cent up to 2023.
On the supply side, after five years of decelerating growth, 2017 saw a small pick-up in world fleet expansion. During the year, a total of 42 million gross tons were added to global tonnage, equivalent to a modest 3.3 per cent growth rate.
Looking at the shipping value chain, Germany remained the largest containership-owning country with a market share of 20 per cent at the beginning of 2018, although it lost some ground in 2017. In contrast, owners from Greece, China and Canada expanded their containership-owning market shares.
Meanwhile, in 2018, the Marshall Islands emerged as the second largest registry, after Panama and ahead of Liberia. More than 90 per cent of shipbuilding activity in 2017 occurred in China, the Republic of Korea, and Japan, while 79 per cent of ship demolitions took place in South Asia, notably India, Bangladesh and Pakistan.
Liner shipping consolidation, technological advances, and climate change policy are key drivers of change in global shipping, the report reads.
Consolidation activity in liner shipping continued unabated: the liner shipping industry witnessed further consolidation through mergers and acquisitions and global alliance restructuring.
As of January 2018, the Top 15 shipping lines accounted for 70.3 per cent of all capacity. Their share has increased further with the completion of the operational integration of the new mergers in 2018, with the Top 10 shipping lines controlling almost 70 per cent of fleet capacity as of June 2018.
Three global liner shipping alliances dominate capacity deployed on the three major East-West container routes, collectively accounting for 93 per cent of deployed capacity. Alliance members continue to compete on price while operational efficiency and capacity utilisation gains are helping to maintain low freight-rate levels. By joining forces and forming alliances, carriers have strengthened their bargaining power vis-à-vis the seaports when negotiating port calls and terminal operations.
Growing consolidation can reinforce market power, potentially leading to decreased supply and service quality, and higher prices. Some of these negative outcomes may already be in effect. For example, in 2017-2018, the number of operators decreased in several small island developing States and structurally weak developing countries.
“There is a need to assess the implications of mergers and alliances and of vertical integration within the industry, and to address any potential negative effects. This will require the commitment of all relevant parties, notably national competition authorities, container lines, shippers and ports,” director of UNCTAD’s Division on Technology and Logistics, Shamika N Sirimanne, said.