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| Commodity price falls mean poorest countries miss UN poverty goals | |
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| Hopes that half of the world’s 48 least developed nations could emerge from extreme poverty by the end of the decade have been dashed after a UN body reported the weakest year of growth in more than 20 years. | Hopes that half of the world’s 48 least developed nations could emerge from extreme poverty by the end of the decade have been dashed after a UN body reported the weakest year of growth in more than 20 years. |
| The UN conference on trade and development (Unctad) said plunging commodity prices had hit the group of least developed countries hard, with 13 of them suffering a fall in living standards in 2015. | The UN conference on trade and development (Unctad) said plunging commodity prices had hit the group of least developed countries hard, with 13 of them suffering a fall in living standards in 2015. |
| A 2011 UN action plan set a target of 7% growth per year for least developed countries’ economic growth over the subsequent decade but the Unctad report said the goal had only been achieved once, in 2012. The reliance of many of the world’s poorest nations on exports of commodities meant that growth slowed to 3.6% in 2015 – the weakest since 1994 – as the prices of oil and industrial metals fell sharply. | A 2011 UN action plan set a target of 7% growth per year for least developed countries’ economic growth over the subsequent decade but the Unctad report said the goal had only been achieved once, in 2012. The reliance of many of the world’s poorest nations on exports of commodities meant that growth slowed to 3.6% in 2015 – the weakest since 1994 – as the prices of oil and industrial metals fell sharply. |
| “Thirteen LDCs [least developed countries] experienced a decline in gross domestic product (per capita) in 2015,” Unctad said in its 2016 least developed country report. “This performance has been strongly influenced by the sharp decline in commodity prices, which has particularly affected African LDCs. Such weak economic growth is a serious obstacle to generating and mobilising domestic resources for structural transformation and investment in the development of productive capacities.” | “Thirteen LDCs [least developed countries] experienced a decline in gross domestic product (per capita) in 2015,” Unctad said in its 2016 least developed country report. “This performance has been strongly influenced by the sharp decline in commodity prices, which has particularly affected African LDCs. Such weak economic growth is a serious obstacle to generating and mobilising domestic resources for structural transformation and investment in the development of productive capacities.” |
| Unctad said the weak performance of LDCs hampered progress towards the UN sustainable development targets – a series of goals for human development intended to be achieved by 2030. | Unctad said the weak performance of LDCs hampered progress towards the UN sustainable development targets – a series of goals for human development intended to be achieved by 2030. |
| The UN classifies a country as an LDC if it has low per capita income of just over $1,000 a year, is perceived as economically vulnerable and scores badly on a range of human indicators, including nutrition, child mortality and enrolment in schools. Graduation is only possible if a country shows a sustained improvement in two of the three categories. | The UN classifies a country as an LDC if it has low per capita income of just over $1,000 a year, is perceived as economically vulnerable and scores badly on a range of human indicators, including nutrition, child mortality and enrolment in schools. Graduation is only possible if a country shows a sustained improvement in two of the three categories. |
| Since the term LDC was coined 45 years ago, only four countries have graduated: Botswana (1994), Cabo Verde (2007), Maldives (2011) and Samoa (2014). Other countries, such as Equatorial Guinea, Tuvalu and Angola will graduate over the next few years. | Since the term LDC was coined 45 years ago, only four countries have graduated: Botswana (1994), Cabo Verde (2007), Maldives (2011) and Samoa (2014). Other countries, such as Equatorial Guinea, Tuvalu and Angola will graduate over the next few years. |
| Unctad said the number of graduations in the coming years was likely to fall well short of the 2011 target, “showing only 10 countries as meeting the graduation criteria by 2020, against a target of 24. By 2025, only 16 countries are projected to have graduated”. | Unctad said the number of graduations in the coming years was likely to fall well short of the 2011 target, “showing only 10 countries as meeting the graduation criteria by 2020, against a target of 24. By 2025, only 16 countries are projected to have graduated”. |
| It said LDCs were affected by three vicious circles. | It said LDCs were affected by three vicious circles. |
| “First, many LDCs suffer from a poverty trap, with low income and limited economic growth giving rise to high levels of poverty, which in turn act as a brake on economic growth. | “First, many LDCs suffer from a poverty trap, with low income and limited economic growth giving rise to high levels of poverty, which in turn act as a brake on economic growth. |
| “Second, many LDCs suffer from a commodity trap, as they depend heavily on commodity production and trade for employment, income, savings and foreign exchange. In the overwhelming majority of LDCs (38 of the 47 for which data are available), commodities accounted for more than two-thirds of merchandise exports in 2013–2015. | “Second, many LDCs suffer from a commodity trap, as they depend heavily on commodity production and trade for employment, income, savings and foreign exchange. In the overwhelming majority of LDCs (38 of the 47 for which data are available), commodities accounted for more than two-thirds of merchandise exports in 2013–2015. |
| “Third, weak productive bases and limited export diversification in LDCs give rise to a very high import content in production and consumption, and chronic current account deficits. These factors in turn result in aid dependence and the accumulation of foreign debt.” | “Third, weak productive bases and limited export diversification in LDCs give rise to a very high import content in production and consumption, and chronic current account deficits. These factors in turn result in aid dependence and the accumulation of foreign debt.” |