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Economic Outlook for Latin America: Uncertainty and Risks but with Opportunities

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] W [/yt_dropcap]hile the economic performance of Latin America is expected to be better this year and next compared to 2016, uncertainties and risks could get in the way of the opportunities, leaders from government, finance and international organizations concluded in a session on the economic outlook for the region at the 2017 World Economic Forum on Latin America.

“The region is pulling out of recession,” said David A. Lipton, First Deputy Managing Director of the International Monetary Fund (IMF) in Washington DC. “The region has the chance to make important strides.” He pointed out that the global context is favourable, with growth momentum picking up on the back of a rise in industrial production around the world. “It’s time for the region to make the most of an opportunity.” Growth in the region could run to 2.5-2.7% in the short term, he added.

“The region is going to grow after two years of contraction,” Alicia Bárcena Ibarra, Executive Secretary, United Nations Economic Commission for Latin America and the Caribbean (ECLAC), agreed. “We have curbed inflation.” But, she cautioned, “the region faces a very uncertain context. What the region hasn’t been able to underpin enough is its investments.” Latin America is difficult to analyse as a whole because of the different situations in each country, but “structural gaps persist that are very complex”. Countries should assess their fiscal space carefully, she advised, noting that more than 14 countries in the region have already undergone tax reforms that have offset in part the drop in non-tax revenue.

“We see upside and downside risks,” Lipton remarked. The uncertainties around the new US administration and its policy decisions, especially in trade, are a concern. Latin American countries would do well to build greater links among themselves, increase intra-regional trade and boost links with other regions and emerging markets, he said.

The word that best describes the outlook for Mexico is “uncertainty”, Guillermo Ortiz, Chairman, BTG Pactual Latin America at Banco BTG Pactual SA, concurred. The rhetoric during the US election was “highly disruptive” for Mexico, he observed. But “I believe we are in a much better situation – those in the US who are in charge of the bilateral agenda are experienced people who know the country very well.”

“The main risk for Panama and the region is the lack of certainties,” Dulcidio De La Guardia, Minister of Economy and Finance of Panama, said. He too argued that the rhetoric of the US presidential campaign does not reflect what is really happening. “We have seen far more reasonable steps taken than what we heard.”

In Brazil, Ortiz reckoned, “something very significant is happening”. The country is exiting its worst recession and the new leadership is poised to deliver a stabilized economy. “The most important issue is to ensure the stability of public finances. There is now a cap in total spending and they are focusing on social security. Inflation is dropping significantly. Brazil will have lower inflation than Mexico. I can’t remember when that last happened. Brazil will show modest growth this year but next year might surprise us with far higher growth.”

Argentina is another turnaround tale in Latin America. “We inherited enormous problems,” Nicolas Dujovne, Minister of the Treasury of Argentina, acknowledged. But since he came into office in 2015, President Mauricio Macri has implemented reform policies that have yielded significant results. Its fiscal consolidation plans have been deliberate. “Fiscal gradualism is not a slogan to procrastinate in fiscal terms,” Dujovne explained. “It is a strategy.” The administration will be focusing on tax reform after upcoming mid-term elections. “This government was confronted with a very difficult situation and has taken the right approach,” Lipton observed. “It is off to a good start and headed in the right direction.”

Asked about corruption across the region, Ortiz predicted that the problem would be “the defining issue” of the presidential elections in Mexico next year. “Corruption is clearly a tax paid by the poor but you have to be certain that, when cleaning your house, you are not knocking it down,” De La Guardia warned. “The fight against corruption hasn’t gone too far,” Dujovne asserted. “Any level of corruption affects investment and the credibility of a country.” “We live in a culture of privileges. But we need to install a culture of shared prosperity – or else we won’t be able to move ahead,” Bárcena concluded.

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Waste-to-energy and circular economy workshops to be held in Uruguay

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photo: UNIDO

The Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC), the United Nations Industrial Development Organization (UNIDO), the Technology Executive Committee (TEC), and the Climate Technology Centre and Network (CTCN) are organizing two workshops during the Latin America & Caribbean Climate Week (LACCW), which will take place between 20 and 23 August in Montevideo. The sessions, titled: “Enabling circular economy solutions to boost climate action” and “Enabling waste-to-energy, industrial waste reuse and prevention solutions to achieve circular economy and boost climate action”, will be held as part of the Regional Technical Expert Meetings on Mitigation (TEMs-M) and the Marrakech Partnership for Global Climate Action.

The first workshop will present the concept of “circular economy”, an alternative to a traditional linear economy (make, use and dispose), which is restorative and regenerative by design and redefines products and services to design waste out, being ultimately powered by renewables. The second workshop will then discuss how waste-to-energy, industrial waste reuse and prevention solutions are integral parts to achieving a circular economy and its associated economic and environmental benefits.

The events will bring together members from the civil society, UN agencies and financial institutions. The high-impact case studies presented will serve as a basis for discussion on the vision/goal in terms of harnessing mitigation potential and co-benefits of circular economy related policies, practices and actions as well as on innovative approaches to waste-to-energy and waste reuse/prevention that are actionable in the short term for the region. Participants will learn the necessary elements for replication and upscaling of circular economy and specifically waste-to-energy solutions, such as policy, partnerships and the need of financial, technical and capacity building resources.

Manuel Albaladejo, UNIDO Representative in Uruguay, said, “It is important to understand that the circular economy starts at the design stage and that profitability rarely comes by bending a linear model into a circular one.”

With the Latin America Carbon Forum as a cornerstone event, the focus of Latin America & Caribbean Climate Week (LACCW) will be placed on market-based approaches, economic instruments and climate-aligned finance to drive investment in climate action.

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Multilateralism: The only path to address the world’s troubles

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Secretary-General António Guterres (center) meets with Rohingya refugees in Cox’s Bazaar, Bangladesh. Photo: UNFPA Bangladesh/Allison Joyce

As the world’s problems grow, multilateralism represents to best path to meet the challenges that lie ahead, said United Nations Secretary-General António Guterres on Tuesday, launching his annual report.

The Report of the Secretary-General on the Work of the Organization  for 2018, also tracks the progress made over the last year in maintaining peace and security, protecting human rights, and promoting sustainable development.

“I started my tenure calling for 2017 to be a year of peace, yet peace remains elusive,” said the UN chief in the report’s introduction, noting that since January last year “conflicts have deepened, with grave violations of human rights and humanitarian law; inequality has risen, intolerance has spread, discrimination against women remains entrenched and the impacts of climate change continue to accelerate.”

“We need unity and courage in setting the world on track towards a better future,” stressed Mr. Guterres, crediting the Sustainable Development Goals (SDGs) for generating coordinated efforts by Member States and civil society to “alleviate poverty and build peaceful, prosperous and inclusive societies.”

Wide-ranging reform

The most comprehensive reform of the UN development system in decades already underway, led by Mr. Guterres and his deputy, Amina Mohammed, aims to strengthen the Organization’s capacity to support Member States in achieving the 17 SDGs.

While the report points to gains, such as increased labour productivity, access to electricity and strengthened internet governance, it also illustrates that progress has been uneven and too slow to meet the 2030 Agenda for Sustainable Development Goals within the given time frame.

For example, in 2015, three out of 10 people did not have access to safe drinking water, and  60 per cent lacked safe sanitation. Moreover conflicts, disasters and climate change are also adversely affecting populations.

The report underlines the importance of building stronger multilateral partnerships with Member States; regional and international organizations; and civil society; to “find solutions to global problems that no nation alone can resolve.”

Although the 2018 High-Level Political Forum on Sustainable Development of 2018 reflected some positive initiatives, it also showed the urgent need to step up efforts in areas such as energy cooperation, water and terrestrial ecosystems.

According to the report, “partnerships are key to achieving the SDGs” – and as of June, 3,834 partnerships had been registered with the Partnerships for the SDGs online platform from different sectors across all the 17 goals.

With regard to technology, last October a joint meeting of the Economic and Social Council (ECOSOC) and the Second Committee welcomed Sophia, the first robot to sit on a UN panel. This gave a glimpse into the advances being made in the realm of Artificial Intelligence.

Turning to young people, UN Youth Envoy, Jayathma Wickramanayake, of Sri Lanka, is continuously advocating for their needs and rights, including in decision-making processes at all levels, and in strengthening the UN system’s coordination on delivering for youth, and with their increased participation.

The UN report also spoke to the growing scale, complexity and impact of global migration. In July, the General Assembly agreed a Global Compact for Safe, Orderly and Regular Migration, which will be presented for adoption in December at an Intergovernmental Conference in Morocco.

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Youth Calls for Action to Build the Workforce of the Future

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Special Senior Advisor to the ADB President Mr. Ayumi Konishi (4th from right) on behalf of ADB signs the Incheon Youth Declaration on The Future of Work at the 6th Asian Youth Forum. Photo: ADB

Over 400 youth representatives from Asia and the Pacific launched the Incheon Youth Declaration on the Future of Work, which calls upon the international community to invest in more inclusive, large-scale, and market-relevant solutions for youth employment and entrepreneurship.

The declaration, launched during the 6th Asian Youth Forum (AYF6) and coinciding with the celebration of the International Youth Day on 12 August, reflects the shared vision, commitments, and calls to action of the youth to inform future policy strategies and project initiatives to promote decent work. AYF6, with the theme “Building the workforce of the future,” was organized by the Asian Development Bank (ADB), Incheon Metropolitan City, Incheon Tourism Organization, Plan International, and AIESEC.

“We at ADB commit to continue investing in youth through our operations, including through our work in education, and in many other sectors we are supporting. We appreciate that the declaration today covers various issues including partnerships, entrepreneurship, as well as environment,” said Special Senior Advisor to the ADB President Mr. Ayumi Konishi, who also emphasized that the declaration will help guide ADB in advancing efforts to invest in education and empowering youth as key development partners in the region.

“Incheon will further boost its efforts to support youth employment and startups through various policies, such as the establishment of youth policy organization, cluster for startup incubators, funds, and forum for startups,” said Vice Mayor of Incheon Metropolitan City Mr. Jong Sik Heo. Acting President of the Incheon Tourism Organization Mr. Yong Sik Lee also attended the event.

The declaration highlights several key issues affecting youth employment and the future of work and what several stakeholders including governments, private sector, civil society, multilateral institutions, academe, and the youth themselves can do to address them. These issues include ensuring decent work and inclusion; transitioning from education and training to work; fostering youth entrepreneurship; and preparing for jobs of the future.

Youth delegates from 20 developing member countries of ADB have expressed their commitment in carrying out the efforts outlined in the declaration. Ms. Priscilla Caluag, a delegate from the Philippines, shared that the Asian Youth Forum has given her and other young people from the region a unique opportunity to act in ways beyond their own personal interests but ultimately for the betterment of society.

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