Launch of World Economic Situation Report in South Africa

Ladies and Gentlemen, Members of the United Nations Family in South Africa, Members of the media, Distinguished Guests.

I would like to extend a warm welcome to the audience and thank you for attending the South African launch of the World Economic Situation and Prospects 2020 report. I am honoured to be making introductory remarks on behalf of the UN family in South Africa. We are also grateful to Dr. Kirsten Thompson for availing herself to lead the presentation of the report. We look forward to her inputs and more importantly we look forward to hearing the voices of those in the audience during the question and answer session.

I have been asked to make a brief opening statement and I intend to certainly make it brief so that we can get to the heart of the day’s proceedings.

At the SDG Summit in 2019 Heads of States and Governments gathered at the United Nations Headquarters in New York to follow up and comprehensively review progress in the implementation of the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals. The event was the first UN summit on the SDGs since the adoption of the 2030 Agenda in September 2015.

Over the past 4 years of implementation we have seen significant response to the SDG agenda from national Governments, cities, local authorities, civil society, the private sector, academia, youth and other actors. This has translated into some progress on key indicators but overall there is acknowledgement that progress is not at the pace required the realise transformative change.

In this regard, Heads of State conveyed their concerns that vulnerabilities are high and deprivations are becoming more entrenched. Assessments show that we are at risk of missing the poverty eradication target. Hunger is on the rise. Progress towards gender equality and the empowerment of all women and girls is too slow. Inequalities in wealth, incomes and opportunities are increasing in and between countries. Biodiversity loss, environmental degradation, discharge of plastic litter into the oceans, climate change and increasing disaster risk continue at rates that bring potentially disastrous consequences for humanity.

The report we will be considering this morning gives insight into the state of the global economy, and by implication the inherent risks we face in terms of achieving the SDGs. It is however important that we not only consider the difficulties we face in terms of the global economic outlook from a risk lens but consider the opportunities that they also offers us.

An important catalyst for attaining many of the SDGs such as eradicating poverty and hunger is prospering economy. As alluded in this World Economic Situation and Prospect, a dynamic and inclusive global economy is essential to meeting the ambitious targets of the 2030 Agenda for Sustainable Development.

In real terms, the global economy has experienced a slowdown in global economic activity, and this poses an enormous challenge as countries strive to reduce poverty, develop essential infrastructure, create jobs, and broaden access to affordable and clean energy. Weak economic performance is also linked to insufficient investment in quality education, health services, social protection, programmes for marginalized groups, and climate change mitigation and adaptation—all of which are essential to advance the 2030 Agenda.

The global economic context painted above and its impact on SDG oriented investments fits hand in glove to the South African situation. Firstly, South Africa’s economy has experienced considerable slowdown over the past 10 to 15 years which has had negative impacts on its ability to make progressive social investments. According to Statistics South Africa, South Africa’s average growth rate was approximately 5 % between 2004 and 2007. Growth declined from 3.0 % and 3.3 % in 2010 and 2011 respectively to 0.4 % and 1.4 % in 2016 and 2017. Growth currently averages at 1.3 %

What have been some of the impacts of these declines?

Stats SA data indicate that the country is experiencing a reversal in the once positive trends towards poverty reduction. An estimated 30.6 million (55.5 %) South Africans live below the Upper Bound poverty line. Of these, 51 % are children aged 0-17 years; youth (18-24 years) constitute 43.6 % and women 57.2 %. High levels of unemployment contribute more than any other factor to the poverty index.

Interestingly the increase in poverty levels in the country is in line with global trends cited in the report, where it is argued that progress towards poverty reduction has slowed in recent years, reflecting the weak growth in per capita incomes in many regions.

At these rates of growth, there is a clear deficit between desired growth rates and actual growth rates required to achieve the SDGs.

As much as we are seen to be punting economic growth as an important element to achieving the SDGs, we must also ask the question:

But is economic growth enough and does it necessarily translate to development?

This is one of the long-standing questions of economic theory and modelling. Over the past two to three decades we have seen a conceptual shift in the response to it. The report correctly asserts that policymakers around the world have increasingly adopted a multidimensional framework of composite measures and systems of accounts that allow a broader understanding of key aspects of the quality of economic growth. It cites the Human Development Index created by United Nations Development Programme (UNDP), the OECD Better Life Index, and the United Nations Sustainable Development Solutions Network’s World Happiness Report, as prominent composite measures of well-being include. Each produced with the aim of providing a more holistic assessment of the state of a country’s human development, well-being or happiness.

So economic growth alone is not enough to achieve the SDGs. We can sum it up by saying: “Growth is a necessary but insufficient factor in our efforts of achieving the SDGs”.

This takes us to another important dimension of the growth conversation: climate change as one of the most notable negative externalities of economic growth.

In Chapter 2 the report addresses what is considered as one of the most urgent challenges of our times, climate change. The authors correctly posit that the rise in living standards over the past century has relied heavily on the depletion of the world’s natural resources and the burning of fossil fuels to power growth. Further arguing that this economic model has been rendered redundant and detrimental for future human progress. Evidence of this is seen through the accelerating pace of environmental degradation, rising greenhouse gas (GHG) emissions, and the increasing intensity and frequency of extreme weather events.

On these bases, arresting global warming constitutes an urgent generational task whose implications goes beyond our own lifetime. We know that our success on this issue is not reliant on technical and policy capacity or solutions alone, but largely hinges on a strong political will on the part of corporate and political elites.

An important case we can cite to demonstrate the dire consequences of a lack of will to address the challenge of climate change is the withdrawal of the United States of America from the 2015 Paris Agreement and immediately ceasing to implement the agreement including implementing the Nationally Determined Contributions (NDCs) and financial contributions.

Essentially, the withdrawal undercuts the foundation of global climate governance and upsets the process of climate cooperation, and the impacts are manifold. The withdrawal undermines the universality of the Paris Agreement and impairs states’ confidence in climate cooperation; it aggravates the leadership deficit in addressing global climate issues and sets a bad precedent for international climate cooperation. The withdrawal reduces other countries’ emission space and raises their emission costs, and refusal to contribute to climate aid makes it more difficult for developing countries to mitigate and adapt to climate change.

Financing is essential to implementing the Paris Agreement, and under the principle of common but differentiated responsibility, developed countries are obligated to provide climate financing to developing countries. Cutting U.S. climate aid will make it more difficult for developing countries to mitigate and adapt to climate change and less likely for these countries to achieve the 2 °C target of the Paris Agreement.

These are important issues that reports of this nature must address and provide meaningful solutions that assist us build accountability of nations to important global agreements of this nature.

For many countries the energy sector accounts for about three quarters of global Green House Gas emissions and will play a crucial role in determining the success of worldwide efforts to rein in climate change. For South Africa this is no different. The Integrated Resource Plan released by the Ministry of Energy and Minerals in 2019 notes that in South Africa the energy sector contributes close to 80% towards the country’s total greenhouse gas emissions of which 50% are from electricity generation and liquid fuel production alone. To this end, much of the country’s efforts at attaining the Intended Nationally Determined Contribution (INDC) rest on transformations to be achieved in the energy sector. The 2019 Integrated Resource Plan presents a real opportunity for South Africa to take leadership on climate change.

Whilst fully acknowledging that a more comprehensive presentation of the report will be done later in the programme, please allow me to conclude by reflecting on some of the salient elements entailed:

• Amid prolonged trade dispute and wide‐ranging policy uncertainties, the world economy has suffered a significant and broad‐based deterioration, threatening setbacks to development goals.
• Rising tariffs and rapid shifts in trade policies have pushed global trade growth down to 0.3 per cent—its lowest level since 2009—and significantly curtailed investment.
• Risks remain strongly tilted to the downside, amid deepening political polarizations, increasing scepticism over the benefits of multilateralism. With limited global policy space, risks have the potential to inflict severe and longlasting damage on society.
• Interest rate cuts alone will not suffice to spur investment, which is held back by uncertainty and a lack of business confidence rather than financing costs.
• The world economy is plagued by risks that threaten financial stability. These may become intertwined with trade tensions, amid prolonged loose monetary conditions, rapid credit growth in some emerging economies and high levels of debt.

I am sure that Dr Thompson will proceed to unpack many of these issues for us in her presentation. As an audience located in the southern tip of the African continent, I would urge that our analytical lens to these issues is focused on their implications for national, regional and broader continental development. The discussion that will ensue this morning based on this report should leave us in a better state of understanding our operating context. It should leave us much more informed on the actions we have to take if we are to achieve the SDGs.

I invite all of us to be activists of the SDGs as we enter this Decade of Action. We only have 10 years to deliver the world we want, the world we need and we should all have our hands on deck.