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Newsweek
06-05-2025
- Business
- Newsweek
Rethinking Development Finance in a Geoeconomic World Order
Advocates for ideas and draws conclusions based on the interpretation of facts and data. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The recent annual IMF-World Bank Spring Meetings convened the world's leading economists and policymakers in Washington, D.C. What was once regarded as a vital forum to discuss global economic projections and future planning, was overcome by a profound sense of trepidation this year. As of 2025, the annual financing gap for achieving the sustainable development goals (SDGs) stands at $4.2 trillion. But amid escalating trade wars, adversarial geoeconomics, and market uncertainty, one crucial argument remains overlooked: the path forward demands confronting the root causes of a broken system. Under the theme "Jobs, the path to prosperity," the gathering in Washington appeared to revert back to outdated macroeconomic models rather than addressing the structural challenges facing low-to-middle income countries (LMICs). In Africa alone, external debt levels increased by a staggering 240 percent between 2008-2022. By 2023, the debt burdens of LMICs reached an unprecedented $8.8 trillion, forcing more than 12 states to default on payments while plunging 30 of the world's poorest countries into "debt distress." The International Monetary Fund (IMF) building sign is viewed in Washington, D.C. The International Monetary Fund (IMF) building sign is viewed in Washington, D.C. KAREN BLEIER/AFP via Getty Images Recommendations from leading international financial institutions (IFIs) must go beyond the fiscal levers of austerity and deregulation if we are to pursue the "path to prosperity." Especially when considering that over 3.3 billion people (approximately 40 percent of the global population) live in countries where more is spent on interest payments than on basic services like education or health care. Over the past three months, the global economic order has faced a moment of reckoning. With a new series of market shocks and tariffs, LMICs have yet again, and through no fault of their own, been left to foot the bill. From a deepening debt crisis to building economic resilience, the existing financial architecture has failed developing economies. Development Finance in a Geoeconomic World Order As the world continues to grapple with the impact of slashed overseas development budgets, the simple truth is that aid alone will not suffice. Even if wealthier states commit to the 0.7 percent of gross national income (GNI) target toward official development assistance (ODA), we will still need to break the vicious debt-cycle and create breathing room for longer-term investments that tackle development challenges. By lowering the cost of borrowing, emerging economies can confront core issues like reducing inequality while enhancing the quality of basic services like education, energy, and health care. Multilateral development banks (MDBs) will also need to dramatically scale up their financial capacity. By implementing an improved G20 Capital Adequacy Framework, deploying blended capital instruments, and reallocating $100 billion from G20 countries' IMF Special Drawing Rights (SDRs)—MDBs could mobilize at least $300 billion annually in affordable financing by 2030. The entire global financial ecosystem must also deliver on the landmark $100 billion pledge to provide the poorest countries with concessional loans under The International Development Association (IDA). The list goes on when it comes to possible solutions, from debt swaps to emergency pause clauses and concessional loans. There is need to adapt metrics and analytical tools to better reflect the structural hurdles of developing countries but also their potential. Ultimately, the challenge lies in overcoming institutional rigidity to mobilize the vast potential of the multilateral system to bridge crucial financing gaps. As evidenced by the outcomes of the recent ECOSOC Forum on Financing for Development in April, systemic reform will be the defining factor. The Path Forward: Translating Commitments to Action This year, the IMF's latest World Economic Outlook delivered a sobering assessment, where global growth projections dropped by 0.5 percentage points. As world leaders contend with a new geoeconomic order, countries will need to compete not only for territory or political influence but for market access and financial stability. And so, the world simply can no longer afford to lose sight of development finance, especially at a time when it could not be more vital. In June, world leaders and financial institutions will have an opportunity to translate commitments into decisive action at the landmark 4th International Conference on Financing for Development in Sevilla, Spain. Preparatory Committee Sessions in New York are already laying the groundwork for what could be a renewed financing framework for sustainable development. This conference is not about politicizing aid and development, but rather about recognizing what is at stake for everyone. History has repeatedly shown us how extreme poverty and deepening inequalities in lower-income countries can escalate into full blown security crises. While leaders navigate a changing world order, confronting the development crisis must go beyond rhetoric and address the structural drivers of global inequality. Innovative solutions go far beyond principles of effective multilateralism, they are a necessity for its evolution and more importantly—its survival. María Fernanda Espinosa, former president of the 73rd U.N. General Assembly and Ecuador's minister of foreign affairs and national defense, now leads GWL Voices as executive director. With over 30 years in academia and international diplomacy, Espinosa is a recognized authority on global governance. The views expressed in this article are the writer's own.
Forbes
18-04-2025
- Business
- Forbes
How Macro Trends Impact Your Local Real Estate Market
The skyline of St. Paul, Minnesota. the capital and second-most populous city in Minnesota. ... More AFP PHOTO / KAREN BLEIER (Photo credit should read KAREN BLEIER/AFP via Getty Images) While knowing the neighborhood where you are investing is certainly an essential component to real estate success, following macro trends can give you a competitive advantage. You may be able to better understand how your local market could be impacted. In a recent podcast, I spoke with Lonnie Hendry, Chief Product Officer at Trepp and host of The TreppWire Podcast, a weekly show which offers insights on commercial real estate, structured finance, and banking news and trends. Lonnie shared the value of keeping the big picture in mind as you operate in your local market. Most recently, the impacts of new tariffs have hit the headlines; as important as it is to account for their effect in your investing decision-making, sometimes tariffs fall into the category of waiting and see what the ultimate implication will be on commercial real estate. As we wait for this to unfold, here are other macro issues to consider as you move forward with real estate investing. Whether you're buying a small multifamily in the suburbs or underwriting a large office building in a major metro area, your transaction will likely involve some level of capital. Those resources, especially funds coming from banks, private equity, or institutional lenders, will typically be deeply influenced by macro trends. When the Federal Reserve raises interest rates, for example, it immediately affects borrowing costs. Another effect relates to lenders, as they typically react by tightening their underwriting standards. For this reason, even if your local market is performing well, you might find fewer lenders willing to finance deals—or the terms become more expensive. In recent years, insurance premiums in commercial real estate have been influenced by natural disasters and the claims that follow. In some markets, especially where insurance used to be a minimal cost, there could now be higher associated charges. Similarly, macro policies like tariffs and taxes can drive up the cost of building materials, labor, and imported equipment. If you're involved in ground-up development or value-add renovations, this could lead to increases in your project's budget. Macro trends also influence how people view the real estate market and the decisions they make. When rates rise, buyers often opt for the sidelines and wait for price corrections. At the same time, sellers might get nervous if deal activity slows down. Conversely, when rates drop or a favorable economic policy is announced, markets may respond by an increase in transactions. Investors may step forward and sellers might raise their prices. You can set up a routine to follow macro trends and be aware of how they could impact your area. You might start by subscribing to newsletters and listening to podcasts which report on large-scale changes. Key indicators like the 10-year Treasury, inflation rates, unemployment data, and major policy announcements can also provide clues. You may also choose to follow the decisions lenders are making and trends in the debt market. You can check CMBS (Commercial Mortgage Backed Security) delinquency rates, for instance. CMBS is effectively a pool of loans which get bundled together and sold as a bond on the secondary market. The underwriting process and mechanics of the loan are effectively the same as a bank loan; however, there are some nuances. CMBS loans are typically non-recourse so they don't have a personal guarantee attached to them. They often get fixed rate financing for a 10-year term and are covenant driven, so there isn't as much of a relationship component as you might find with a local lender. Your deal may be in your neighborhood, but ultimately your success will depend on your ability to interpret and act on what's happening globally. Real estate is cyclical and macro trends do more than influence your market—they often set the tone. To stay ahead, you can follow the bigger picture to see what effects may come your way. This will help you be prepared to make informed decisions and take advantage of upcoming opportunities.
