Economic upturn masks challenges to sustainable development: UN

UNITED NATIONS, April 13 (Xinhua) -- The 2017 broad-based upturn in the global economy is not distributed evenly, masking significant weaknesses challenging continued growth and in the long-run threatening the 2030 Sustainable Development Goals (SDGs), said a UN report released Friday.

"While not evenly distributed -- per capita growth remains negative or insignificant in many countries where poverty rates are high -- the positive momentum is expected to continue," said the report "Financing for Development: Progress and Prospects 2018."

While momentum is expected to provide a basis for financing the SDGs, "the cyclical upturn masks significant weaknesses and medium-turn risks," said the report.

"A disorderly tightening of financial conditions, the adoption of inward-looking policies and associated increases in interest rates and debt vulnerabilities, or an escalation of geopolitical tensions could derail development progress," said the 191-page report complied by more than 50 UN and UN-related agencies.

"Persistently high levels of inequality pose a challenge to robust growth and sustainable development," it said. "Declining private investment in infrastructure and a renewed increase in global carbon emissions in 2017 are stark reminders of the inability, so far, to sufficiently align investment with long-term sustainable development."

"If left unaddressed, structural impediments will continue to undermine sustainable development prospects," the report said. "The current cyclical upturn in the global economy provides an opportunity to focus policy-making on addressing long-standing concerns and to accelerate the pace of progress towards the SDGs."

There is an increasing interest in socially responsible investing, but that is no substitute for a broader transformation in the financial system, the report said.

The current system rewards investors, financiers and project managers that prioritize short-term profits, it said. Similarly, policy-makers are excessively focused on short-term considerations.

But there is a price to pay when long-term infrastructure projects are shelved in favor of short-term priorities, it said. Also, small businesses and women remain excluded from the financial system.

"The good economic news in some regions masks the very real risk that the poorest will be left behind," said Liu Zhenmin, UN undersecretary-general for economic and social affairs. "There is no room for complacency."

"If we don't invest in infrastructure projects like bridges, roads and sewage systems, if the poorest and women are cut off from access to credit and other financial services, we have little prospect of achieving our global goals," he said.

The lack of long-term investment horizons also means that major risks, such as those from climate change, are not incorporated into decision-making, the report said.

The solution lies in a multifaceted approach including changing payment practices: the compensation of financial advisors and portfolio managers is too often linked to short-term results. More transparency also helps: some countries now require all listed companies to disclose financial risks they face from climate change.

Short-sighted policies also result in a lack of access to finance for countries in urgent need, said the report.

Support for countries affected by disasters is often too little, too late, it said.

Innovative financial instruments exist that provide quicker access to funding. Countries can set up insurance-like mechanisms, and the international community can support those that can't afford premiums. Loans can be set up to reduce repayments automatically during crises.

So far, major funders have not taken up these promising tools, the report said.

The task force that wrote the report expressed the hope that its recommendations would put the world on a sustained and more sustainable growth and development path. Enditem