Global economy is shifting East, Global South must seize the moment: Shaktikanta Das

The global economy is undergoing a shift towards the East, creating new opportunities for Global South economies but also exposing them to sharper risks from energy shocks, trade barriers and geopolitical uncertainty, PTI reported on Tuesday, citing Principal Secretary-2 Shaktikanta Das' remarks to the Prime Minister.

Addressing a RIS session on ‘Navigating Uncertainty: The Global South and the Emerging New Economic Order,' Das said countries in the Global South need to turn this shift into actionable strategies focused on food security, trade diversification, energy transition, macroeconomic stability and job creation.

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“The economic gravity of the world is shifting eastward,” Das said, adding that the Global South was steadily increasing its footprint in the global economy and geopolitics. According to PTI, he said these changes would reshape global trade and business in the years ahead.

The backdrop, however, remains challenging. Das said the ongoing conflict in West Asia had pushed up energy prices and renewed inflationary pressures, which could weigh on global growth and consumer purchasing power, as per the report. Persistent trade policy uncertainty, geopolitical tensions and weather-related shocks also pose risks to the global economy.

For Global South economies, the energy shock is particularly significant because many are net energy importers. Das said the West Asia conflict had highlighted their vulnerability to higher energy costs, which can increase fiscal pressures and strain foreign exchange reserves.

“Diversification of the energy mix can reduce vulnerability and strengthen domestic resilience,” Das said, calling for greater use of renewables and biofuels. He also stressed the importance of coordination, technology transfer and knowledge sharing among Global South nations to support energy security and the transition.

Trade is another pressure point as protectionist policies become more widespread. Das said Global South countries need to strengthen the competitiveness, reliability and efficiency of their firms as trade barriers and tariff challenges increase.

He also flagged the challenge of maintaining macroeconomic stability as governments attempt to shield consumers from higher energy and commodity prices while dealing with conflict-driven cost pressures. Such pressures could lead to higher indebtedness, tighter monetary conditions and rising debt-servicing costs, particularly in countries already running large fiscal deficits.

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Citing World Bank estimates, Das said fiscal deficits in emerging market and developing economies are expected to widen in 2026, particularly among energy-importing countries, before easing only modestly thereafter. PTI reported that he called for fiscal and structural reforms in the real economy to manage this balancing act.

Job creation will be another critical test. Das said 1.2 billion young people in emerging market and developing economies are expected to reach working age over the next decade, making higher investment essential to generate sufficient employment.

He said rapidly growing urban areas would require particular attention, as they are typically the main centres of employment generation.

Despite the risks, Das said the Global South has steadily increased its contribution to global growth despite being disproportionately affected by multiple shocks. He said the current economic transition presents an opportunity, particularly for countries pursuing development and structural reforms.

The Global South continues to face challenges including poverty, debt vulnerabilities, infrastructure gaps, climate change, food and energy insecurity and limited access to technology. At the same time, access to wealthy consumer markets and advanced technologies is becoming more difficult for low- and middle-income economies amid rising protectionism, Das said.