The pace of economic growth of the LDCs has been accelerating in recent years, however, this has generally not been enough for most of them to meet target 8.2 of the SDGs: “an economic growth rate of at least 7 per cent”, - says the recent UNCTAD Report.
Para. 27 of Agenda 2030, states a commitment to “build strong economic foundations for all our countries (… and) strengthen the productive capacities of least developed countries in all sectors, including through structural transformation”. According to the Recept Report by the UNCTAD: "Selected sustainable development trends in the least developed countries – 2019", despite the positive growth, international trade and export performance, most LDCs show slow progress in transforming their economies and, however, continue to face a decline in FDI and a finance gap between donors’ pledges and actual development aid provided. However, another major challenge of LDCs is that their high population growth requires even higher growth rates of GDP to make progress in poverty reduction and more generally to achieve the SDGs. In order to substantially reduce poverty in LDCs and to reach target 1.1 “By 2030, eradicate extreme poverty for all people everywhere” much more progress is needed.
Only significantly faster per capita GDP growth of 10 per cent, or a halving of inequality can lead to levels of extreme poverty below 10 per cent by 2030 (United Nations, 2019). Together these trends expose LDCs to greater external shocks, vulnerabilities, and challenges in financing their sustainable development strategies and plans. The Report highlights some of LDCs’ key development challenges, which stem from the structural characteristics of their economies, but also from their specific terms of insertion into the global economy.
The Report by the UNCTAD focuses on the international dimension of development and an enabling international environment as an integral part of the success of national efforts. In terms of a more supportive international environment, the Report mentioned the recovery of commodity prices (with the exception of cocoa, coffee and tea), that has been a major driver of increased LDC growth rates since 2016.
The report suggests that the economies of the LDCs are highly exposed to macroeconomic trends beyond their borders and if negative expectations on the world economy such as geopolitical uncertainty, tensions and the futher crisis of the multilateral cooperation materialize, they could wipe out the recent gains in LDC economic growth and exports. These countries’ vulnerability to external shocks, coupled with natural disasters and climate-change-related risks will continue to undermine economic gains unless LDCs accelerate the pace of diversification and structural transformation of their economies. Failing this, - says the Report - their challenges in reaching internationally agreed development goals will persist. However, globally, economic growth strengthened in both 2017 and 2018 in more than 50 percent of all economies and stood at 3.1 per cent at the world level in 2018. This may, however, have been the peak of the latest global economic cycle. If confirmed, it would cloud the future economic outlook for LDCs.