Global South faces a big moment as world moves east

The world's economic landscape is shifting eastward, presenting both opportunities and challenges for economies in the Global South. Principal Secretary-2 Shaktikanta Das warned that the shift could expose these nations to energy shocks, trade barriers and geopolitical uncertainty, according to a report by PTI. Das urged the Global South to focus on food security, trade diversification, energy transition, macroeconomic stability and job creation as they navigate the changing economic order.

The report noted that many Global South countries are net energy importers, making them particularly vulnerable to energy price hikes caused by conflicts in West Asia. Das called for greater use of renewable energy and biofuels to reduce the vulnerability of these economies to energy shocks. Trade is also a concern as protectionist policies increase, placing additional pressure on the Global South to strengthen their competitive edge and adapt to trade barriers.

Das emphasized the importance of coordination, technology transfer and knowledge sharing among Global South nations to support energy security and the energy transition. The report also highlighted the challenge of maintaining macroeconomic stability as governments attempt to cushion consumers from higher energy and commodity prices while coping with conflict-driven cost pressures.

This could lead to higher debt levels, tighter monetary conditions and rising debt servicing costs, especially for countries already grappling with large fiscal deficits. Despite the risks, Das noted that the Global South has been steadily increasing its contribution to global growth. He stressed the importance of investment in young people to create sufficient employment, particularly in rapidly growing urban areas.

Despite ongoing challenges, Das saw the current economic transition as an opportunity, especially for countries that are pursuing development and structural reforms.