About one in three countries worldwide is at high risk of a fiscal crisis, with developing countries facing the greatest burden of debt.
Since the onset of the pandemic, the total external debt for developing nations increased by 15% compared to 2019, said the fifth edition of UNCTAD’s annual SDG Pulse report.
Over the past decade, external debt of developing countries has more than doubled, reaching a staggering $11.4 trillion. Low-income countries bear the brunt of the costs associated with servicing these debts. In 2022, they spent around 19.3% of their government revenue on debt servicing, which is four times higher than the figure recorded in 2012.
The accumulation of public debt presents a significant barrier to development and the achievement of the Sustainable Development Goals (SDGs). It hampers governments’ capacity to invest in essential services such as healthcare and education, undermining their ability to provide for the needs of their populations, the UNCTAD said.
“We’ve reached the halfway mark of the 2030 Agenda, and multiple global crises are battering our economies, societies and the planet,” said Anu Peltola, who leads UNCTAD’s statistics work.
“It’s more important than ever for policymakers to have timely and reliable data and analysis to guide their decisions.”
FIGHT AGAINST HUNGER LOSING GROUND
The funding available per person in a food crisis experienced a significant decline of 30% between 2017 and 2021. This reduction in funding exacerbates the challenges faced by populations already grappling with food insecurity.
Despite an abundance of food globally, approximately seven out of ten economies import more food than they export. This situation is particularly prevalent in the Middle East and Africa, where many nations rely on food imports.
Cereals, a vital component of the global food supply, have gained attention due to the conflict in Ukraine. Cereals contribute approximately 45% of the available calories for the world’s population. Although agricultural export subsidies have diminished over time, reaching near-zero levels in 2021 compared to the substantial amounts of $3 trillion to $4 trillion two decades ago, market-distorting policies persist.
These policies can put certain countries at a disadvantage in international trade, increasing their vulnerability to food insecurity. As a result, they may face difficulties in ensuring an adequate and stable food supply for their populations.
CLIMATE RESILIENCE AT RISK, VULNERABLE NATIONS IN JEOPARDY
In 2021, greenhouse gas emissions reached another record high, contributing to carbon dioxide concentrations that have not been seen in the past two million years. Despite the pressing need to reduce emissions by 45% by 2030, emissions actually increased by 4.2% in 2021 and continue to rise. This trend is further exacerbated by the soaring energy prices experienced in 2022, with fuel prices peaking at nearly three times their pre-pandemic levels in August 2022, and natural gas prices increasing nine fold .
The impacts of climate change disproportionately affect the least developed countries (LDCs) and small island developing states (SIDS). These regions are at greater risk of climate-related disasters, with the UN Office for Disaster Risk Reduction (UNDRR) projecting a 40% increase in such events globally from 2015 to 2030.
However, there is some positive news in the realm of transportation. Global sales of electric cars experienced a significant leap of 55% in 2022, with a total of 10 million units sold.
It is crucial to prioritize and intensify efforts to transition towards low-carbon economies to mitigate the impacts of climate change. The United Nations Conference on Trade and Development (UNCTAD) has developed new data resources on bio trade, ocean trade, and plastics trade, providing valuable tools to assess progress in this regard. These resources can aid in evaluating the effectiveness of measures taken to address climate change and guide further actions towards sustainable and low-carbon economies.
ECONOMIC DIVERSIFICATION REMAINS A CHALLENGE
Many developing economies continue to face challenges in diversifying their trade portfolios, which can hinder their economic growth and resilience.
In 2021, all 25 nations with the highest trade concentration index were developing economies. This indicates an over-reliance on a small number of exports, often consisting of raw materials and commodities. Such a narrow export base can leave these economies vulnerable to external shocks, price fluctuations, and market disruptions.
Additionally, manufacturing exports accounted for only one third of merchandise exports in least developed countries (LDCs) in 2021. This highlights the need for these economies to further develop their manufacturing sectors and move up the value chain to diversify their exports and create more sustainable and resilient economies.
However, there is positive progress in the share of high-tech exports in certain regions. In Africa and LDCs, the proportion of exports that are classified as high-tech products is increasing. This suggests a shift towards more advanced and technologically sophisticated industries, which can contribute to economic diversification and higher value-added exports.
Furthermore, the rise of digital technologies presents significant opportunities for economic diversification, especially in a global economy that is increasingly digitalized. Digitally deliverable services now constitute nearly two thirds of all services exports worldwide. This demonstrates the potential for developing economies to leverage digital platforms and technology to participate in global value chains, expand their service sectors, and diversify their trade offerings.
Promoting economic diversification and embracing digital technologies can help developing economies reduce their dependence on a limited range of exports, enhance their competitiveness, and foster sustainable and inclusive growth.
