The UN says a decade of development progress could be undone by COVID-19.
According to the new Financing for Sustainable Development Report 2021, published Thursday by a task force composed of more than 60 UN agencies, the global economy suffered the worst recession in 90 years because of the pandemic, and the “most vulnerable segments of societies disproportionately affected.” The report says that over the last year, 120 million people have pushed back into extreme poverty and 114 million jobs were lost.
Additionally, the report warns that there is a “grave danger of a sharply diverging world,” the report adds, as some countries recover quickly thanks to strong stimulus measures and digital solutions, while others sink further into poverty, hunger, unsustainable debt and austerity.
That inequity is markedly noticeable in stimulus figures: An historic $16 trillion in stimulus and recovery funds have been rolled out by central banks during the pandemic, according to the report, but less than 20 percent of that was spent in developing countries. And as of January 2021, only nine of the 38 countries rolling out vaccines were developing countries. Some may even have to wait years.
Debt vulnerabilities have also increased along with debt levels. The report says that before the pandemic, around half of the world’s least developed and other low-income countries were already in debt distress or at risk of it. Now, with a drop in tax revenues, foreign direct investment, trade and remittances, debt levels are “soaring.”
As a result of these setbacks, the report warns that achieving the 2030 Sustainable Development Goals could be pushed another 10 years into the future.
“What this pandemic has proven beyond all doubt is that we ignore global interdependence at our peril,” said UN Deputy Secretary-General Amina Mohammed in a press release. “Disasters do not respect national boundaries. A diverging world is a catastrophe for all of us.”
Mohammed added that it is both morally right and in everyone’s economic self-interest to help developing countries overcome the pandemic. Otherwise a 10-year setback in development could have significant destabilizing effects on economies and societies, such as notable increases in migration.
In February, the International Monetary Fund (IMF) wrote that “the convergence between countries can no longer be taken for granted.” Before the pandemic, the IMF estimated that income gaps between advanced economies and 110 emerging and developing countries would narrow over 2020 to 2022. Now, the IMF projects that only 52 economies will catch up to their wealthier counterparts during that same two-year period, while 58 others are expected to fall behind.
To prevent a “lost decade for development,” as the report puts it, the task force recommends several immediate steps that governments, particularly those of developed countries, can take. First, reject vaccine nationalism and step up funding to the Access to COVID-19 Tools Accelerator (ACT), of which COVAX is the vaccine pillar. According to the report, a $20 billion funding gap for ACT remains for 2021. Second governments should meet the 0.7% official development assistance commitment to provide financing for developing countries. And third, provide liquidity and debt relief support to avert debt distress as countries fight the pandemic and its economic and social repercussions.
Additionally, the report says there are fundamental steps that need to be taken to rebuild better and “create future resilience.” Investing $70 billion to $120 billion over the next two years, and $20 billion to $40 billion annually after that, in sustainable infrastructure and innovation, for example, would “significant reduce the likelihood of another pandemic, as opposed to the trillions in economic damages already caused by COVID-19. In addition, such “smart investments” would create economic growth, improve livelihoods and combat climate change. But developing countries will need support making that level of investment.
“Countries must be helped to not only stay afloat financially, but to invest in their own development,” Liu Zhenmin, Under-Secretary-General of the Department of Economic and Social Affairs, said in a press release. “The growing gap between rich and poor countries is troublingly retrogressive and requires an immediate course correction.”