Global Debt Crisis Stifles Developing Nations, Says UN Official

A deepening global debt crisis is suffocating growth in the developing world, with countries collectively owing an alarming $31 trillion, according to Rebeca Grynspan, the Secretary-General of the UN Conference on Trade and Development (UNCTAD).

Addressing UNCTAD’s 195 Member States in Geneva, Grynspan described the situation as a “debt and development crisis” that leaves many nations facing “impossible choices.” She explained that many governments are being forced to choose between servicing debt and investing in development goals, such as education, healthcare, and infrastructure.

“Countries are being pushed to default on either their debt or their people,” Grynspan said, warning that rising tariffs, retreating investment, and global mistrust are combining to stifle economic progress.

The UNCTAD chief outlined several interlinked factors worsening the crisis:

1. Rising Tariffs:
Tariffs imposed by major economies have jumped from 2.8% to over 20% this year. Grynspan called this surge “the highest tariff possible—uncertainty,” which discourages trade and long-term investment.

2. Retreating Investment:
Global investment is falling for the second straight year, with developing nations receiving a smaller share. “The cost of a single U.S. dollar of investment is three times more expensive in Zambia than in Zurich,” Grynspan noted, underscoring the imbalance.

3. Volatile Freight Costs:
Landlocked countries and small island developing states face transport costs up to three times higher than the global average, eroding their competitiveness and increasing the cost of imports.

4. The Digital Divide:
Despite the promise of Artificial Intelligence (AI) adding trillions to global GDP, only one in three developing countries have national strategies to benefit from it. Moreover, 2.6 billion people—mostly women in developing regions—remain offline.

Grynspan emphasized that protecting the rules-based international trading system, particularly under the World Trade Organization (WTO), is vital. “If we abandon the trading system, we risk a spiral of protectionism that will make an already fragile global economy even more unstable,” she warned.

The UNCTAD chief urged wealthier nations and international financial institutions to restructure debt, enhance trade equity, and bridge the digital divide, warning that failure to act could entrench global inequality for decades.