Category: 3. Business

• Globalization is being rewired by geopolitics and policy shifts. The financial system will have to adapt to better serve the real-economy needs.

• Policy volatility is now a persistent challenge for trade, investment and development.

• Financial shocks spill over rapidly into the real economy, revealing gaps in the global economic architecture.

• Developing economies drive global growth but face the highest financing and climate risks.

• Coordinated reforms linking trade, finance, debt and climate action can restore stability and recentre development.

Global growth will slow to 2.6% in 2025, down from 2.9% in 2024, as global trade and investment face growing pressure from financial volatility and geopolitical uncertainty, according to UN Trade and Development’s new “Trade and Development Report 2025: On the Brink – Trade, finance and the reshaping of the global economy”. The report shows that shifts in financial markets move global trade almost as strongly as real economic activity, influencing development prospects worldwide.

UN Trade and Development (UNCTAD) Secretary-General Rebeca Grynspan said the findings show how financial conditions increasingly determine the direction of global trade: “Trade is not just a chain of suppliers. It is also a chain of credit lines, payment systems, currency markets and capital flows.”

Global trade rose by about 4% early in 2025, driven in part by firms accelerating imports ahead of tariff changes, but also by structural shifts: Services are expanding faster, supported by growth in the digital economy and artificial intelligence, and South–South trade is growing above average. Beneath these factors, underlying trade growth is estimated at between 2.5% and 3% and is expected to ease further as financial conditions influence production and investment decisions more strongly.

More than 90% of global trade depends on bank finance. Dollar liquidity and cross-border payment systems are also crucial for international trading activities. This deep reliance on financial channels makes trade closely linked to global financial and monetary conditions. A shift in interest rates or investor sentiment in a major financial centre can affect trade volumes worldwide. For developing countries, where access to affordable credit is limited, these financial pressures can undermine otherwise viable trade transactions.

The report also highlights the increasing role of financial factors of commodity markets, particularly in essential food systems.

For several major food trading companies, more than 75% of income now stems from financial operations rather than the physical movement of goods.

Developing economies face mounting pressures

Developing economies are forecast to grow by 4.3%, significantly faster than advanced economies. But they face higher financing costs, greater exposure to sudden shifts in capital flows and rising climate-related financial risks. These factors limit the fiscal and investment space needed to sustain growth.

The global South accounts for more than 40% of world output, nearly half of global merchandise trade and more than half of global investment inflows.

Yet its role in global financial markets remains limited. Excluding China, developing countries represent only about 12% of global equity market value and around 6% of global bond issuance.

Because their domestic financial markets are small, many developing economies rely on external borrowing at significantly higher cost. Borrowing rates of 7% to 11% are common, compared with 1% to 4% in major advanced economies. 

These elevated costs often reflect structural issues in the international financial architecture rather than economic fundamentals, reducing long-term investment and slowing growth.

Climate vulnerability adds to financial pressures. Countries repeatedly exposed to extreme weather now pay an estimated 20 billion dollars more each year in interest because lenders perceive them as riskier. Since 2006, these additional premiums have cost climate-vulnerable economies about 212 billion dollars – resources that could have supported social investment or climate adaptation.

Dollar dominance continues to anchor global finance

Despite gradual diversification of international reserves, the dollar remains central to global finance. Its share of international payments through SWIFT has risen from 39% to about 50% in five years. 

The United States also accounts for half of global equity market value and about 40% of global bond issuance. 

While this provides stability in uncertain periods, it also links developing economies to financial cycles over which they have limited influence.

Targeted reforms to restore stability and support development

UNCTAD outlines a set of practical reforms aimed at reducing financial vulnerability, improving predictability and supporting stronger alignment between trade, finance and development. The report calls for:

• Fix the multilateral trade dispute system so rules are enforced and uncertainty is reduced.
• Update trade rules for today’s economy; including services, digital trade, climate action and new industrial strategies.
• Close data gaps on trade and investment statistics to better inform and coordinate policies.
• Reform the international monetary system to limit harmful swings in currencies and capital flows.
• Strengthen regional and domestic capital markets so developing countries can raise affordable long-term finance.
• Use macroprudential tools (rules that reduce negative financial spillovers) to better protect trade and investment.
• Improve transparency in commodity trading and expand access to affordable trade finance, especially for small businesses.

Rebeca Grynspan said reconnecting trade and finance is essential for lasting stability: “What does genuine resilience require? Integrated policy frameworks that recognize links between trade, finance and sustainability.” She added that coordinated reforms can strengthen long-term development prospects: “Fundamentally, we cannot understand trade isolated from finance.”

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San Francisco will file the nation’s first government lawsuit against food manufacturers over ultra-processed foods (UPFs) on Tuesday, arguing that local governments have been shouldering the costs of treating diseases that stem from public consumption of the companies’ products.

The city’s attorney, David Chiu, told the New York Times they will sue 10 corporations that create some of the country’s most popular food and drinks, from chicken nuggets and frozen pizzas to potato chips and sugary breakfast cereals – but also foods like breads and granola bars that are marketed as “healthy”.

UPFs are industrially manufactured food products and contain ingredients not found in the average home kitchen, such as preservatives, flavor enhancers, artificial colors and emulsifiers, with little to no whole food content. It is estimated that more than 70% of the US food supply is composed of foods commonly considered ultra-processed, and that children get over 60% of their calories from such foods.

The world’s largest review, published last month, found that UPFs are linked to harm in every major organ system of the human body and pose a seismic threat to global health. They are associated with an increased risk of a dozen health conditions, including cancer, obesity, type 2 diabetes, depression, heart disease and cognitive decline.

That review also found that global corporations, not individual choices, are driving the rise of UPFs. UPFs are a leading cause of the “chronic disease pandemic” linked to diet, with food companies putting profit above all else, the authors said.

Chiu’s lawsuit, which will be filed in the San Francisco superior court on behalf of the state of California, will seek unspecified damages for the costs that cities and counties bear for treating residents whose health has been harmed by ultra-processed food.

San Francisco accuses the companies of “unfair and deceptive acts” in how they market and sell their foods, arguing that such practices violate the state’s unfair competition law and public nuisance statute. It also argues the companies knew that their food made people sick but sold it anyway.

“It makes me sick that generations of kids and parents are being deceived and buying food that’s not food,” Chiu told the Times.

It marks a rare moment of alignment between liberal San Francisco and the Trump administration. Donald Trump’s health and human services secretary, Robert F Kennedy Jr, has railed against UPFs – one of his least polarizing stances – as part of his Make America Healthy Again mission, urging Americans to limit their consumption of foods with added sugar, salt, fat, dyes and preservatives.

Chiu stressed to the NYT that he did not agree with Kennedy on other health topics, including vaccine skepticism. But he said that the science was indisputable when it comes to ultra-processed foods. “Many of the perspectives of this administration are not backed by science, but this is different,” Chiu said. “Even a broken clock is right twice a day.”

The defendants in the lawsuit include the Coca-Cola Company, PepsiCo, Kraft Heinz Company, Post Holdings and Mondelez International. It also names General Mills; Nestlé USA; Kellogg; Mars Incorporated; and ConAgra Brands.

Earlier this year, California passed a bipartisan bill that became the first in the US to provide a statutory definition of UPFs, and laid a foundation for banning them from schools. California has also banned several additives, including food dyes, linked to behavioral difficulties in children, in schools. In 2010, San Francisco banned fast-food restaurants from giving free toys.

The city attorney’s office also has a track record of winning against big corporations on public health matters, including tobacco companies, lead paint manufacturers and opioid manufacturers, distributors and dispensers.

Kress’ comments add to intensifying discussion around a partnership that ties two of the most significant players in the artificial intelligence race and is at the center of rising concerns around circular deals in the AI ecosystem.

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“We still haven’t completed a definitive agreement, but we’re working with them,” Kress said, addressing questions about the framework of Nvidia’s agreement with OpenAI.

OpenAI, the startup at the heart of the generative AI boom that kicked off with the launch of ChatGPT in late 2022, is a major customer for Nvidia’s chips, alongside large cloud providers which make up a large portion of the chipmaker’s sales.

The chips Nvidia could provide to OpenAI after its agreement is finalized are not included in these bookings and would add to the number, Kress said on Tuesday.

“That half a trillion doesn’t include any of the work that we’re doing right now on the next part of the agreement with OpenAI,” she said.

Nvidia shares were up 2.6%.

Over the past year, Nvidia has struck a series of deals with AI startups and invested in firms that are also major customers, stoking Wall Street concerns about an AI bubble and so‑called circular deals.

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This article first appeared on GuruFocus.

U.S. stocks rose Tuesday as investors regained footing after a slow start to December, buoyed by gains in bitcoin and technology shares.

The Dow Jones Industrial Average climbed 188 points, or 0.4%, while the S&P 500 advanced about 0.5%. The Nasdaq Composite rose 0.8%, led by strength in AI-related technology names.

Bitcoin surged roughly 6%, recovering losses from the prior day, providing a boost to market sentiment. Shares of Nvidia (NASDAQ:NVDA) increased nearly 2% as investors focused on AI-driven growth opportunities.

Smaller AI and semiconductor companies also saw sharp gains. Credo Technology jumped 17% to an all-time high following better-than-expected earnings, while Astera Labs rose about 6%.

Analysts said optimism is also fueled by expectations that the Federal Reserve may cut interest rates at its Dec. 10 policy meeting. Markets are pricing in more than an 87% chance of a reduction, up from mid-November levels.

December tends to show seasonal strength, and technical indicators have improved, said Mark Hackett, chief market strategist at Nationwide. Yet concerns over AI spending and high valuations remain.