The UN Trade and Development Agency (UNCTAD) has warned that the global financial system risks undermining international trade if it fails to adapt to evolving economic needs, with developing countries, including African economies, likely to be most affected. The report highlights that financial markets increasingly drive global trade, with credit lines, payment systems, currency markets, and capital flows now shaping trade as much as real economic activity. UNCTAD notes that more than 90% of global trade relies on bank financing, making trade highly sensitive to financial market volatility, interest rate changes, and investor sentiment in major financial centres. While developing economies are projected to grow faster than advanced economies, they face challenges such as higher financing costs, volatile capital flows, and climate-related risks, which constrain fiscal and investment space needed to sustain growth. The report emphasizes the centrality of the dollar in global finance, which provides stability but also exposes developing countries to financial cycles beyond their control.
UNCTAD calls for urgent reforms to align trade and finance to ensure resilience, including modernising trade rules, reforming the international monetary system to reduce currency and capital-flow volatility, and strengthening capital markets to expand access to affordable long-term finance. Secretary-General Rebeca Grynspan stresses that genuine resilience requires integrated policy frameworks linking trade, finance, and sustainability, noting that trade cannot be understood in isolation from financial systems.