Launch of World Economic Situation and Prospects 2019
Ladies and Gentlemen,
I am very pleased to be able to present to you this year’s World Economic Situation and Prospects, a flagship publication of the UN. The WESP is a joint publication that benefits from the collective expertise of economists across the UN system, including UN DESA, UNCTAD and the five regional commissions of the United Nations, plus bodies such as the World Tourism Organization and the International Labour Organization. The report lays out the economic Context and the challenges faced by policy makers in the context of delivering on the 2030 Agenda for Sustainable Development.
This year’s edition of the WESP paints a picture of significant disparities. On the surface, the world economy remains on a fairly steady trajectory moving into 2019. According to the headline figures in the report, economic activity around the world is projected to expand at a steady pace of around 3 per cent.
Yet, a closer look below the surface reveals significant issues with the foundations and quality of global economic growth. Economic growth is uneven and is often failing to reach the countries and the groups where it is most needed—per capita incomes will stagnate or grow only marginally in 2019 in several parts of Africa, Western Asia, and Latin America and the Caribbean. At the same time, the world economy is faced with a confluence of rising risks with the potential to severely disrupt economic activity and inflict significant damage on longer-term development prospects:
Over the past year, international trade tensions have escalated, particularly between the US and China; private and public debt levels have risen to historic highs; and financial vulnerabilities have increased amid these elevated debt levels and tightening global financing conditions. While the adverse effects have so far been largely contained, both factors cast a shadow over the outlook for 2019 and beyond.
These short-term risks are compounded by the waning support multilateral approaches. Pressures and tensions have materialized not only in international trade, but also in the area of international development finance and climate change. Small developing countries, low-income countries and least developed countries are particularly vulnerable to a broader withdrawal from multilateral approaches to global policy making.
In the case of a downturn in global economic activity, policymakers around the globe will struggle to react forcefully, as monetary and fiscal space in many countries is now much more limited than at the outbreak of the global financial and economic crisis a decade ago. And, given waning support for multilateral approaches, coordinated action in response to a shock – similar to the response to the global financial crisis – may be more difficult to achieve.
Alongside various short-term risks, there is an increasing urgency to deal with much more fundamental problems. What we have hitherto viewed as long-term challenges, such as climate change, have become immediate short-term risks.
In recent years, we have seen an increasing number of extreme weather events that have had particularly severe effects on vulnerable countries, including many Least Developed Countries and Small Island Developing States. Building resilience by supporting the most vulnerable countries to invest in climate resilient infrastructures, is as important as rebuilding after a disaster. There has been progress, but efforts need to be stepped up to ensure that we are adequately responding to these critical challenges. This also underscores the urgency of stepping up the mobilization of resources for sustainable investments.
Before my colleague Dawn Holland provides you with more details of the report, I would like to stress two final points:
First, the world is faced with a whole range of problems that are truly global in nature. One of these is climate change. The essential transition towards sustainable production and consumption is simply not happening fast enough—our economies remain much too carbon-, energy-, and resource-intensive. We need much stronger efforts to delink economic growth from environmental degradation, and this means shifting our resources away from investments away in the old brown technologies to investments in new, more resource-efficient and low-carbon technologies.
Second, these global problems cannot be addressed by individual countries alone. We can only confront the risks to the global economy and the associated development challenges through collective action and cooperative approaches. A withdrawal from multilateralism would pose further setbacks for those already being left behind.
The current challenges to multilateralism stems in part from the fact that the gains from globalization have not been equally shared, and the needs of many people have not been met. The solution however, is not to withdraw into unilateral action. Instead, we should focus on strengthening the system, dealing with these shortcomings, in the full understanding that this is the best way to deliver a sustainable future.