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Strong Asian Intraregional Trade and Investment Improve Economic Resilience

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Growing trade and investment linkages in Asia and the Pacific help improve the region’s economic resilience to uncertainties in the global economic and trade policy environment, according to a new Asian Development Bank (ADB) report.

In a study released today, the Asian Economic Integration Report 2017 (AEIR), ADB examines recent regional integration trends and introduces a new regional integration index. The report also includes a special chapter on how Asia can strengthen financial resilience in an era of financial interconnectedness.

Strong intraregional trade and investment are acting as a buffer for the region against uncertainties in global trade and economic growth, according to the report. In 2016, Asia’s intraregional trade share―measured by value―rose to 57.3% in 2016, a record high, up from an average of 55.9% from 2010 to 2015.

Foreign direct investment (FDI) within Asia rose in absolute value to reach $272 billion in 2016, despite a 6% decline in global FDI flows into the region. This intraregional FDI increased as a share of total FDI to the region from 48% in 2015 to 55% in 2016. Given the role intra-Asian FDI plays in enhancing global and regional value chain development, this is expected to help strengthen the region’s trade growth globally.

Asian economies have continued expanding their global presence, with FDI originating from Asia rising 11% in 2016 to $482 billion, primarily through investment in renewable energy, natural resources, semiconductors, and information technology.

“Asia and the Pacific is leading a recovery in world trade that is helping the region to maintain strong growth momentum amid global economic and trade policy uncertainty,” said Yasuyuki Sawada, ADB’s Chief Economist. “Asia’s continued integration and cooperation will underpin regional economic growth and financial resilience.”

The 2017 AEIR introduces a new composite index, the Asia-Pacific Regional Cooperation and Integration Index. The index measures regional integration across six components, including trade and investment, money and finance, regional value chains, infrastructure and connectivity, movement of people, and institutional and social integration. The index is aimed at helping policymakers better understand and measure the levers for greater regional integration and cooperation.

The report also features a special chapter on how Asia can strengthen financial resilience in an era of financial interconnectedness. It highlights that 20 years after the Asian financial crisis, Asia stands strong, with healthier financial systems, stronger regulations, and better regional financial cooperation mechanisms.

Significant challenges remain, however, with unresolved financial market and system weaknesses. Remaining regulatory policy gaps could also increase the region’s risk exposure and financial vulnerability through excessive leverage and risk-taking.

The report offers several recommendations for countries in the region to strengthen their resilience to future crises, including maintaining sound macroeconomic fundamentals; further strengthening national regulatory and supervisory frameworks and institutional capacities; further developing local currency bond markets; strengthening regional regulatory cooperation, including resolution mechanisms for interconnected regional banks; and reviewing and strengthening existing financial safety nets against potential contagion and spillover effects.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.

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New Satellite Data Reveals Progress: Global Gas Flaring Declined in 2017

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New satellite data released today shows a significant decline in gas flaring at oil production sites around the world in 2017, despite a half-percent increase in global oil production. The nearly 5 percent flaring decline begins to reverse years of increases in global gas flaring that started in 2010.

The data reveals about 141 billion cubic meters (bcm) of natural gas was flared in 2017, down from nearly 148 bcm in 2016. While Russia remains the world’s largest gas flaring country, it also saw the largest decline in flaring last year. Venezuela and Mexico also reduced their flaring significantly in 2017. In Iran and Libya there were notable increases in gas flaring.

The data was released by the Global Gas Flaring Reduction Partnership (GGFR), a World Bank-managed organization comprised of governments, oil companies, and international institutions working to reduce gas flaring. The U.S. National Oceanic and Atmospheric Administration (NOAA) and GGFR have developed the flaring estimates in cooperation with the University of Colorado, based on observations from advanced sensors in a satellite launched in 2012.

Gas flaring – the burning of natural gas associated with oil extraction – takes place because of technical, regulatory, and/or economic constraints. It causes more than 350 million tons of CO2 emissions every year, with serious harmful impacts from un-combusted methane and black carbon emissions. Gas flaring is also a substantial waste of energy resources the world can ill afford.

“The latest global gas flaring data is encouraging, but we will have to wait a few more years to know whether it represents a much-needed turning point,” said Riccardo Puliti, the World Bank’s Senior Director and head of its Energy & Extractives Global Practice. “Ending routine gas flaring is a key component of our climate change mitigation agenda, and the global flaring reduction Initiative we launched just three years ago now has 77 endorsers, covering about 60 percent of the total gas flared around the world.”

In 2015, UN Secretary-General Ban Ki-moon, World Bank President Jim Yong Kim, and 25 initial endorsers launched the “Zero Routine Flaring by 2030” Initiative that commits endorsers to not routinely flare gas in new oil field developments and to seek solutions to end routine flaring at existing oil production sites as soon as possible and no later than 2030. It has now been endorsed by 27 governments, 35 oil companies, and 15 development institutions.

“The Initiative is an essential tool for ending routine flaring,” said Bjorn Hamso, GGFR’s Program Manager. “Going forward, it is paramount that oil field operators continue to address ongoing “legacy” flaring, and that new business models are developed that will enable more investors to participate in flaring reduction projects.”

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World Tourism Day Places Focus on Innovation & Digital Transformation

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The importance of digital technologies in tourism, providing opportunities for innovation and preparing the sector for the future of work, is at the centre of World Tourism Day 2018, to be celebrated in Budapest, Hungary (27 September 2018).

World Tourism Day, celebrated every 27 September around the world, is a unique opportunity to raise awareness on tourism’s actual and potential contribution to sustainable development.

This year’s World Tourism Day (WTD) will help to put the opportunities provided to tourism, by technological advances including big data, artificial intelligence and digital platforms, on the map of sustainable development. The World Tourism Organization (UNWTO) sees digital advances and innovation as part of the solution to the challenge of marrying continued growth with a more sustainable and responsible tourism sector.

“Harnessing innovation and digital advances provides tourism with opportunities to improve inclusiveness, local community empowerment and efficient resource management, amongst other objectives within the wider sustainable development agenda”, said UNWTO Secretary-General Zurab Pololikashvili.

The WTD official celebration will be held in Budapest, Hungary, a country enjoying steady growth of tourism backed by consistent policy support and a commitment to the digital future. Other celebrations will take place worldwide.

The official celebration will also see the announcement of the semi-finalists of the 1st UNWTO Tourism Startup Competition, launched by UNWTO and Globalia to give visibility to startups with innovative ideas capable of revolutionizing the way we travel and enjoy tourism.

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EU and China step up cooperation on climate change and clean energy

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At the China-EU Summit on 16 July in Beijing, the President of the European Commission Jean-Claude Juncker, the President of the Council, Donald Tusk, and the Chinese Prime Minister Li Keqiang adopted a “Leaders’ Statement on Climate Change and Clean Energy”. Commission Vice-President Jyrki Katainen and the Chinese Minister of Ecology and Environment Li Ganjie signed a Memorandum of Understanding to enhance cooperation on emissions trading between China and the EU.

In the Leaders’ Statement, China and the EU underline the need to advance the implementation of the Paris Agreement under the UNFCCC process, and to get the Paris Agreement Work Programme – the rulebook for the implementation of the Paris Agreement – adopted at the next global climate conference in December 2018 in Katowice, Poland.

The Statement shows how the EU and China will intensify their political, technical, economic and scientific cooperation on climate change and clean energy to drive forward a world-wide transformation to a thriving low carbon and climate-resilient economy and society and clean energy system. It clearly shows their commitment to climate action and achieving a clean energy transition are urgent imperatives.

In the Memorandum of Understanding China and the EU acknowledge emissions trading as a cost-effective policy tool with significant potential to contribute to a low-carbon economy and the necessary innovation and deployment of low carbon technologies.

Welcoming this commitment, President Juncker said: We have underlined our joint, strong determination to fight climate change and demonstrate global leadership. It shows our commitment to multilateralism and recognises that climate change is a global challenge affecting all countries on earth. There is no time for us to sit back and watch passively. Now is the time for decisive action.

Commissioner for Climate Action and Energy Miguel Arias Cañete said: Further developing cooperation between the two largest emission trading systems of the world is not only in our mutual interest but also necessary to tackle common challenges in the mid- and longer term. The newly established policy dialogue will be instrumental in this context.

The Memorandum of Understanding on EU-China cooperation on emissions trading establishes a policy dialogue, foresees the joint organisation of seminars and workshops, as well as joint research activities.

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