DESA's Financing for Development Office held a briefing on the current global economic situation.
FfDO noted that several SDG targets are at risk, as few LDCs are expected to reach the target of 7% growth by 2019, and without a decline in inequality, a quarter of Africa’s population may remain in extreme poverty by 2030.
UNCTAD cautioned that accommodating central bankers, dot.com billionaires and cryptocurrencies traders will not provide inclusive growth.
2 February 2018: The UN Department of Economic and Social Affairs (DESA) briefed Member States on the current global economic situation, based on reports by DESA, the International Monetary Fund (IMF), and the UN Conference on Trade and Development (UNCTAD). Experts presented the risk and opportunities of the economic global outlook, as well as policy suggestions to safeguard gains and ensure inclusive economic growth.
The high-level briefing was organized by DESA’s Financing for Development Office on 2 February 2018, in New York, US, and highlighted the following reports: DESA’s ‘World Economic Situation and Prospects 2018,’ IMF’s ‘World Economic Outlook, October 2017,’ and UNCTAD’s ‘Trade and Development Report.’ The analyses and discussion will inform the recommendations put forward by the Inter-agency Task Force on Financing for Development (IATF) in its report to the 2018 Financing for Development Forum (FfD Forum), convening from 23-26 April, in New York, US.
Delivering opening remarks, Liu Zhenmin Under-Secretary-General for Economic and Social Affairs, noted that the private sector’s investment in infrastructure declined in 2017. He emphasized the need for investments to be oriented towards long-term prospects.
Dawn Holland, DESA, said two thirds of countries in the world saw improved economic conditions in 2017, with the global forecast showing a steady global growth of 3% for 2017-2019. Regarding 2017, she noted that this is the first time in several years when a forecast has been revised upwards and not downwards. She said world trade is rebounding, driven by demand from East Asia, and that East and South Asia contribute nearly half of global growth. Other factors that contributed to global growth included: the end of recessions in Argentina, Brazil, Nigeria and Russia; and firmer growth in developed economies such as Japan, the EU, Canada and the US. However, she stressed, only negligible growth is expected for gross domestic product (GDP) per capita in some parts of Africa, Latin America, and Western Asia.
Holland also highlighted that several SDG targets are at risk. For example, few least developed countries (LDCs) are expected to reach the target of 7% growth by 2019; and under current projections, without a decline in inequality, a quarter of Africa’s population may remain in extreme poverty by 2030. Other risks include: increased carbon dioxide (CO2) emissions resulting from stronger growth; a rise in protectionism; a sudden deterioration in global financial conditions; and rising geopolitical tensions. As longer-term policy goals, she recommended: increasing economic diversification; reducing inequality; building a financial architecture to support long-term investment needs; and tackling institutional deficiencies.
Malhar Nabar, IMF, said the ‘World Economic Outlook’ recommends as areas of strategic focus: raising potential output, while addressing ongoing structural transformation (labor-saving technological change and cross-border competition), through comprehensive policy approaches that reduce the pain of adjustment and provide opportunities for all; securing the recovery and building resilience through placing public debt on a sustainable path, while supporting demand where still needed and feasible; and strengthening international cooperation. Nabar also emphasized the need to invest in improving the skills of workers and to build fiscal buffers to prepare for the next downturn in a way that protects the vulnerable and prevents sharp contractions.
The global economy picked up, but has not yet taken off.
Richard Kozul-Wright, UNCTAD, cautioned that accommodating central bankers, “dot.com billionaires” and cryptocurrencies traders will not provide the inclusive growth that we need. Noting that “the global economy picked up but has not yet taken off,” he observed that public spending remains constrained, and a significant increase in investment can be seen only in China. In addition, he said, there are struggles with investment in the digital economy. Kozul-Wright warned that education per se does not provide a solution to inequality. As an effective policy for reducing inequality he mentioned the introduction of minimum income legislation in Latin American countries. He also stressed the need to discuss global competition policy and intellectual property rights with regards to innovation in developing countries, in order to address inequality.
In the ensuing discussion, participants addressed issues related to, inter alia, the link between austerity measures and inequality, and the need to better capture the situation of African countries in this kind of publication. [Event Website] [World Economic Situation and Prospects 2018] [SDG Knowledge Hub story on WESP 2018] [World Economic Outlook, October 2017] [Trade and Development Report 2017] [SDG Knowledge Hub story on UNCTAD report]