The newly released World Economic Situation and Prospects for 2019 illustrates how rising economic, social and environmental challenges hamper progress towards the United Nations Sustainable Development Goals.

Concerns –

  • On the surface, the world economy remains on a steady trajectory.
  • Many developed economies are operating close to their full potential with unemployment rates at historical lows.
  • But headlines do not tell the whole story. There are many risk factors that could inflict significant damage on longer-term development prospects.
  • There are many risk factors that could inflict significant damage on longer-term development prospects.

Challenges to global economy –

  1. Monetary policy challenges –
  • Over the past year, trade policy disputes have escalated, and financial vulnerabilities have increased as global liquidity tightens.
  • Global private and public debt is at a record high, well above the level seen in the run-up to the global financial crisis.
  • Interest rates remain very low in most developed economies, while central bank balance sheets are still bloated. With limited monetary and fiscal space, the multilateral approaches, concerted actions — like those implemented in response to the 2008-09 crisis — may be difficult to arrange.

2. Inequality –

  • Even if global growth remains robust, its benefits do not reach the places they are needed most.
  • Incomes will stagnate or grow only marginally this year in parts of Africa, Western Asia, Latin America and the Caribbean.
  • The challenges are most acute in Africa, where per capita growth has averaged only 0.3% over the past five years.
  • Given rapid population growth, the fight against poverty will require faster economic growth and dramatic reductions in income inequality.

3. Climate Change –

  • The transition towards environmental sustainability is not happening fast enough.
  • The nature of growth is not compatible with holding the increase in the global average temperature to well below 2°C above pre-industrial levels.
  • The frequency and intensity of extreme weather events are increasing, damaging vital infrastructure and causing large-scale displacement.
  • The human and economic costs of such disasters fall overwhelmingly on low-income countries.

What should be done?

  • Many of the challenges are global in nature and require collective and cooperative policy action.
  • Withdrawal into nationalism and unilateral action will only pose further setbacks for the global community, especially for those already in danger of being left behind.
  • Instead, policymakers need to work together to address the weaknesses of the current system and strengthen the multilateral framework.

SourceThe Hindu