World leaders gathered last month in the United Nations Headquarters for a series of high-level meetings and summits to demonstrate how they will accelerate action to transform our societies and economies to end poverty, respond to the climate crisis and secure a sustainable future for all.
Despite the breadth of action and initiatives that the 2030 Agenda has inspired, action to meet the SDGs is not yet advancing at the speed or scale required. Violent conflicts, climate change, gender disparities, and persistent inequalities are undermining efforts to achieve the SDGs.
Uneven economic growth, high and rising debt levels, heightened trade tensions, and financial volatility create additional obstacles to SDG achievement.
The necessary political, technological and financial solutions are within our reach. But we need unprecedent, ambitious action, much greater leadership and more effective multilateral cooperation. This was clearly recognized in the Political Declaration Member States adopted in the SDG Summit.
I. Global Economic Growth Prospects
The global environment has shifted dramatically since 2018. Indicators point to economic slowdowns in systemically important economies, amid unresolved trade tensions and elevated international policy uncertainty.
The United Nations estimates that world economic growth will moderate, from 3.0 per cent in 2018 to 2.7 per cent in 2019 and 2.9 per cent in 2020.
Aggregate growth in the least developed countries (LDCs) is expected to fall to 4.6 per cent in 2019 before rebounding to 5.85 per cent in 2020; however, remaining still well below the SDG target for LDCs of 7 per cent growth.
While part of the growth slowdown reflects temporary factors, downside risks remain high. Prolonged trade disputes could have significant spillovers, including through weaker investment and the disruption of production networks.
Recent monetary policy shifts have reduced short-term financial pressures, but may further fuel debt accumulation, increasing medium-term risks to financial stability.
These persistent macroeconomic risks are compounded by greater frequency and intensity of disasters due to climate change.
Amid elevated downside risks, many countries today have limited macroeconomic policy space to mitigate the effects of an adverse shock. Slowing economic activity and low inflationary pressures have prompted shifts in the monetary policy stances of major central banks, but most were already operating with interest rates far below historical norms.
The easing of monetary policy may have reduced some short-term risks but is unlikely to significantly boost domestic demand in countries with highly leveraged household and corporate sectors.
For many economies, the ability to introduce large-scale fiscal stimulus measures is limited, given persistent fiscal deficits and elevated public debt levels. For commodity-dependent economies, fiscal space remains constrained as commodity prices are still well below levels seen before 2014.
II. Opportunities for Financing Sustainable Development
Building on the momentum generated last month in the United Nations and given the slow and uneven progress towards the SDGs, the UN Secretary-General issued a global appeal for a “Decade of Action” to deliver the SDGs by 2030. As we begin the Decade of Action, financing must be front and center of our efforts and solutions.
As called for by the UN Secretary-General, we need bold actions to accelerate the much- needed global transformation of finance in line with a carbon neutral world.
The UN General Assembly’s High-Level Dialogue on Financing for Development, on 26 September, made it clear that both the scale and the scope of financing for sustainable development fall short of what is needed to finance the 2030 Agenda and public and private resources are not sufficiently aligned with the SDGs.
Leaders emphasized the need for strengthened multilateral cooperation in areas of trade, climate finance, debt sustainability, investment, international tax cooperation, and combatting illicit financial flows.
While the task of raising public resources is central for most governments, national tax reforms and tax policy need to be complemented by global action to close loopholes and safeguard national tax collection efforts.
Urgent action is needed on financial secrecy, corruption, corruption facilitators, corporate tax evasion and avoidance, and other types of illicit financial flows. Reforms in these areas must prioritize the needs and realities of developing countries.
Governments have large investment needs for the SDGs. When debt finances investments in infrastructure and productive capacities, it not only provides direct funding for sustainable development progress, but it can also stimulate growth that generates the resources to repay lenders. However, debt sustainability threatens to become a stumbling block. Rising debt constrains SDG investments in many countries, particularly those with climate and structural vulnerabilities.
A growing share of public expenditure is used to service debt rather than invest in the SDGs. 31 low-income and least developed countries are currently either at high risk of debt distress, or already in debt distress.
Fig 1: Debt Risk Classifictaion of Low-Income Countries, 2017-2018 (% of Total)
To help countries formulate INFFs, the Inter-Agency Task Force (IATF) on Financing for Development laid out key building blocks in the 2019 Financing for Sustainable Development Report (Figure 2). The UN Secretariat has worked closely with the IMF, the World Bank Group, WTO, UNDP, UNCTAD, and more than 50 UN and other agencies, to produce the report.
14 countries have already announced that they have embarked on a country-led initiative to develop INFFs supported by the United Nations and the European Union. Through this initiative countries will be supported in developing diagnostic tools and strengthening national capacity for designing and implementing INFFs. These 14 countries are also looking to the Inter-Agency Task Force to provide substantive guidance and will receive support from the UN System in country.
III. The Urgency of Climate Action
The message from the Climate Action Summit, including from youth representatives, was clear: the climate emergency is a race we are losing but it is a race we can win if we change our ways now.
The scientific community agrees:
- we need to cut greenhouse emissions by 45 per cent by 2030 and significantly invest in adaptation and resilience now;
- reach carbon neutrality by 2050; and
- limit temperature rise to 1.5 degrees Celsius by the end of the century.
According to the latest IPCC Report on the Ocean and Cryosphere, global warming has already resulted in profound consequences for ecosystems and people. The ocean is warmer, more acidic and less productive. Melting glaciers and ice sheets are causing sea level rise, and coastal extreme events are becoming more severe.
The new report of UNDP and UN Climate Change (UNFCCC) shows that with countries’ existing climate plans, greenhouse gas emissions will rise by 10.7 per cent above 2016 levels by 2030, a number starkly at odds with deep cuts required.
Climate action provides an unprecedented opportunity to unlock massive economic and social benefits and accelerate structural transformations for sustainable development.
Action now is not only a moral imperative; it also makes business sense. Studies have found that bold climate action could trigger US$26 trillion in economic benefits by 2030, create over 65 million new jobs and avoid 700,000 premature deaths from air pollution (Figure 3).
Figure 3: Findings of the “United in Science” Report (Left) and Global Benefits of a Decisive Shift to a Low-Carbon Economy compared with Business-As-Usual (Right)