The United Nations’ Financing for Sustainable Development Report 2026 reveals that closing the estimated USD4 trillion investment gap for the Sustainable Development Goals (SDGs) will require a much stronger domestic private sector.
Development financing is currently moving in the wrong direction, the UN warned today. In many sectors, progress has not only stalled but is sliding backward due to fraying global cooperation, new trade barriers, geopolitical friction, and frequent climate disasters. The report highlights that a growing number of developing nations—particularly the poorest and most vulnerable—are struggling with massive funding shortfalls amid a global “financing squeeze.” These countries are simultaneously dealing with dwindling aid, the rising costs of environmental damage, high borrowing costs, and heavy debt repayments.
Debt burdens in these nations reached 20-year highs in 2024. Meanwhile, Official Development Assistance (ODA) dropped 6 percent in 2024 to USD214.6 billion and is expected to fall another 10 percent to 18 percent in 2025—with cuts potentially reaching 25 percent for Least Developed Countries (LDCs). Foreign Direct Investment (FDI) also slumped 11percent in 2024 to USD1.5 trillion, marking a second straight year of decline.
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Even before the recent economic shocks caused by the closure of the Strait of Hormuz, trade and geopolitical tensions had already triggered sharp tariff hikes. The report notes that average tariffs on LDC exports jumped from 9 percent to 28 percent in 2025. For developing countries excluding China, average tariffs increased nearly tenfold, rising from 2 percent to 19percent.
“This is an extremely dangerous time for international cooperation, as geopolitics increasingly dictate economic relations and financial policies,” said UN Under-Secretary-General Li Junhua. “However, we have seen promising resilience in areas like renewable energy investment, thanks in part to steady collaboration between countries despite the ongoing pressure on multilateralism.”
