Author: Martina Fuchs:
Date: September 23, 2020
GENEVA, Sept. 22 (Xinhua) -- The world is at risk of a "lost decade" and "hyper-inequality" triggered by the coronavirus crisis if austerity measures become countries' winning policy mindset, warned a senior official of the United Nations Conference on Trade and Development (UNCTAD) on Tuesday.
"We are worried that despite the fact that there will be a recovery in the second half and into the next year, we will -- if we are not careful -- repeat the mistakes of the global financial crisis," Richard Kozul-Wright, UNCTAD's director of the division on globalization and development strategies, told Xinhua in an interview on the sidelines of the UN agency's Trade and Development Report 2020 release.
"And that we will go into austerity too quickly and there will certainly be a double-dip recession sometime in the next 18 months followed by... a lost decade not only for developing countries but for many developed countries as well," Kozul-Wright said.
In its flagship annual report, the Geneva-based UNCTAD said the world urgently needs coordinated public action for a faster economic recovery in the face of a deep global recession.
UNCTAD forecasts the global economy to contract by 4.3 percent this year, but expects a return to positive territory with a gross domestic product (GDP) growth rate of 4.1 percent in 2021, according to the report.
In comparison, the International Monetary Fund (IMF) in June projected global output to decline by 4.9 percent in 2020, followed by a partial recovery with growth at 5.4 percent in 2021.
Meanwhile, UNCTAD said temporary relief packages unleashed mainly by advanced economies estimated at 13 trillion U.S. dollars for G20 countries had mitigated some of the declines.
As one of the few large economies to witness growth this year, China's GDP is expected to grow at 1.3 percent in 2020, before rebounding sharply by 8.1 percent in 2021, UNCTAD's report showed.
"China has obviously managed the pandemic better than other economies so far. It has a lot of domestic space to be able to manage a strong recovery. A lot will depend on policy choices. But we believe that China has the opportunity to seriously expand its domestic economy," Kozul-Wright said.
"Given the size of the Chinese economy, that gives the opportunity for a fairly large recovery next year."
On the global scale, the agency warned of a looming "lost decade," foreclosing on any hope of delivering the 2030 Agenda for Sustainable Development.
When asked about the 17 Sustainable Development Goals (SDGs), Kozul-Wright said: "The SDGs were already struggling before COVID-19. If we do enter a period of slow growth and reduce government spending, there is absolutely no chance that the 2030 Agenda will be delivered on time and things could be worse."
"People have forgotten that we are still facing a climate crisis. And we need to not only address the existing inequalities and fractures in the world, we need to shift to a different kind of growth model if we are going to seriously address that problem," he added.
The UNCTAD report stressed that the key to success will be tackling a series of pre-existing conditions that were threatening the health of the global economy even before the pandemic hit.
They include hyper-inequality, unsustainable levels of debt, weak investment, wage stagnation in the developed world and insufficient formal sector jobs in the developing world.
"The real concern is that the inequalities were already there before COVID-19. COVID-19 has reminded us that we didn't tackle them after the global financial crisis. The promise was that we would address the inequalities, but most countries in the West failed to do that," Kozul-Wright said.
"There has to be a focus on full employment and wages in the advanced economies. The developing countries need support to boost their industrial development," he said. "We need proper employment and wage policies, but we will also need proper social policies." Enditem
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