Economic gravity shifting eastward, says Shaktikanta Das
The economic gravity of the world is shifting eastward and the ‘Global South’ nations should frame actionable strategies in areas like food security, trade and energy transition to capitalise on the opportunities, Principal Secretary-2 to the Prime Minister Shaktikanta Das said on Tuesday.
Das said the ongoing conflict in West Asia has triggered a sharp increase in energy prices and renewed inflationary pressures, both of which will stifle global growth and the purchasing power of countries purchasing power of the consumers.
The ongoing and persistent trade policy uncertainty, geopolitical strains and weather-related shocks also pose material risks to global growth, he said. Talking about the Global South and India’s role in shaping the new geo-economic order, Das said these economies, despite being disproportionately impacted by so many shocks, have steadily increased their contribution to global growth and their role in the world economy. Global South broadly refers to a diverse and heterogeneous group of developing, emerging and less-industrialised nations.
The economic gravity of the world is shifting eastward. The Global South is steadily increasing its footprint in the global economy and geopolitics. These shifts are reshaping the contours of the global economy and will leave behind a lasting impact on the way we do business and trade in the years to come.
“This churning offers great opportunities for the Global South, especially countries which have embarked upon a path of development and structural reforms,” Das said, addressing a RIS session on ‘Navigating Uncertainty: The Global South and the Emerging New Economic Order’. Das highlighted five challenges faced by Global South nations — food security, trade diversification, energy transition.
He called for Global South nations to pursue policies that strengthen their competitiveness, reliability and efficiency of their firms, and more so in today’s times of trade barriers and tariff challenges.
Das also said the recent conflict in West Asia has underscored the vulnerability of the Global South economies to energy shocks, with energy-importing countries bearing the brunt through higher fiscal pressures and strained foreign exchange reserves.
“The lesson is clear. Diversification of the energy mix can reduce vulnerability and strengthen domestic resilience. Renewables and biofuels can enhance energy security and economic stability.
“Global coordination, technology transfer and knowledge sharing within the Global South will be critical for promoting energy security and transition,” he said.
Maintaining macroeconomic stability is key, Das said, adding that authorities in the Global South are increasingly confronted with a tough fiscal and monetary balancing challenge amidst conflict-induced cost surges and the need to protect the local population from energy and commodity price shocks.
This may result in elevated indebtedness, tighter monetary conditions and increased debt servicing costs, especially in the countries that are facing higher fiscal deficits, he said.
According to World Bank estimates, fiscal deficits of the emerging market and developing economies are expected to widen in 2026, especially among energy importers, before easing only modestly thereafter.
“Global South economies should therefore adroitly manage this balancing act by undertaking fiscal and structural reforms in the real sector,” Das added.
Currently, poverty, debt vulnerabilities, infrastructure gaps, climate change, food and energy insecurity, and even access to technology remain pressing concerns in several parts of the world.
A record 1.2 billion young people in the emerging market and developing economies are set to reach working age over the next decade.
Boosting investment will be crucial to create sufficient job opportunities, particularly in rapidly growing urban areas where most employment is usually generated, he added.
The Global South countries will also have to deal with the rising protectionist tendencies globally, he said, adding that access to the richest consumer markets and technologies is also becoming more difficult for the low- and middle-income countries.
