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Exports, Domestic Demand Deliver Solid Growth in Asia and the Pacific

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Growth picked up across most of the economies in developing Asia, supported by continued high demand for exports and rapidly expanding domestic demand, says a new Asian Development Bank (ADB) report.

In its new Asian Development Outlook (ADO) 2018, ADB forecasts gross domestic product (GDP) growth in Asia and the Pacific to reach 6.0% in 2018 and 5.9% in 2019, a slight deceleration from the 6.1% registered in 2017. Excluding the high-income newly industrialized economies, growth is expected to reach 6.5% in 2018 and 6.4% in 2019, from 6.6% in 2017. ADO is ADB’s flagship annual economic publication.

“Economies across developing Asia will maintain the current growth momentum driven by sound policies, expanding exports, and robust domestic demand,” said Yasuyuki Sawada, ADB’s Chief Economist. “Strong regional trade links and rising financial buffers position the region well to withstand potential external shocks, including the risks of rising trade tensions and rapid capital outflows.”

The recovery in industrial economies continues, with the US, euro area, and Japan expected to collectively grow by 2.3% in 2018 before slowing to 2.0% in 2019. Recently enacted tax cuts will fuel growth in the US as the Federal Reserve keeps inflation in check through gradual monetary tightening. Meanwhile, rising business confidence and easy monetary policy will support growth in the euro area and Japan.

The service sector is fueling the People Republic of China’s (PRC) continued growth, increasing by 8% in 2017. Growth in the PRC will slow to 6.6% in 2018 and 6.4% in 2019, following the rapid 6.9% expansion in 2017. Strong demand at home and abroad together with economic reforms lay the foundation for continued growth and macroeconomic stability in the PRC.

Growth in South Asia remains among the world’s fastest, driven by a recovery in India, the region’s largest economy. Indian growth is expected to pick up to 7.3% in fiscal year (FY) 2018 and 7.6% in FY2019, following the estimated 6.6% in FY2017. The impact of the demonetization of high-value banknotes has dissipated and the full implementation of the goods and services tax will bolster growth through 2019.

Southeast Asia continues to benefit from the rise in global trade and the pickup in commodity prices. The subregion is expected to maintain its 2017 growth rate of 5.2% in both 2018 and 2019. Strong investment and domestic consumption will drive an acceleration in growth in Indonesia, the Philippines, and Thailand, while an expansion in its industrial base will boost Viet Nam.

Growth in Central Asia is expected to reach 4.0% in 2018 and 4.2% in 2019, on the back of rising commodity prices. Meanwhile, growth in the Pacific will reach 2.2% and 3.0% over the next 2 years as the region’s largest economy, Papua New Guinea, stabilizes following an earthquake that temporarily disrupted gas production.

Asian consumers and commodity price rises will fuel higher inflation in the region. Regional consumer price inflation is projected to accelerate to 2.9% in 2018 and 2019, from the 2.3% registered in 2017. Inflation projections for the next 2 years, however, are well below the 10-year regional average of 3.7%.

Risks to the outlook are tilted to the downside, driven primarily by fears of escalating trade tensions. Recent US tariffs on select products have not yet dented trade, but further actions by the US and counteractions against them could undermine business and consumer confidence in Asia and the Pacific. Higher US interest rates could accelerate capital outflows, although this risk is mitigated to some degree by abundant liquidity throughout the region. Fortunately, most Asian economies are well positioned to meet these challenges.

Rising private debt remains a concern in some Asian economies. ADB research prepared for the ADO shows that debt accumulation has a positive impact on economies only in the short run. Private debt in developing Asia has risen markedly since the global financial crisis and its limited effect on output suggests not all of the additional debt is channeled into productive investments. Authorities can counter this risk by strengthening regional financial systems.

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Aviation Sector Calls for Unified Cybersecurity Practices to Mitigate Growing Risks

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airplane travel

The aviation industry needs to unify its approach to prevent cybersecurity shocks, according to a new study released today by the World Economic Forum. The increased level of interdependencies can lead to systemic risks and cascading effects as airlines, airports and aircraft manufacturing take different approaches to countering cyber risks.

To guard against these risks and create a streamlined approach with civil aviation authorities, the World Economic Forum has launched the Cyber Resilience in Aviation initiative in collaboration with more than 50 companies.

The latest report, Pathways to a Cyber Resilient Aviation Industry, developed in collaboration with Deloitte, outlines how the industry – from airlines to airports to manufacturing and the supply chain – can work with a common language and baseline of practices. The report focuses on mitigating the impact of future digital threats on multiple levels:

International:

· Aligning regulations globally

· Establishing a baseline of cyber resilience across the supply and value chain

· Designing an impartial assessment and benchmarking framework

· Developing international information-sharing standards

National:

· Enabling reskilling

· Rewarding more open communication on aviation incidents

Organizational:

· Integrating cyber resilience in business resilience practices

· Ensuring risk assessment and prioritization

· Improving collaboration

“The aviation industry has developed a strong track record of safety, resilience and security practices for physical threats and must integrate cyber risks into this culture of safety and resilience,” said Georges De Moura, Head of Industry Solutions, Centre for Cybersecurity, World Economic Forum. “A common understanding and approach to existing and emerging threats will enable industry and government actors to embrace a risk-informed cybersecurity approach to ensure a secure and resilient aviation ecosystem.”

“The work of the World Economic Forum on aviation cyber resilience complements these global efforts led by the ICAO and is another excellent example of the importance of broad-based international collaboration among public and private stakeholders,” said Fang Liu, Secretary-General, International Civil Aviation Organization (ICAO).

“Adopting a collaborative cyber-resilience stance and creating trust between cross-sector organizations, national and supranational authorities is the logical yet challenging next step,” said Chris Verdonck, Partner, Deloitte, Belgium. “However, if the effort is not collective, cyber risks will persist for all. Further solidifying an extensive and inclusive community and developing and implementing a security baseline is key to adapt to the current digital reality.”

The Cyber Resilience in Aviation initiative has enabled organizations to create plans as a community to safeguard against current and future risks. It convenes over 80 experts from more than 50 organizations across global aviation and technology companies, international organizations, trade associations and national government agencies. Major collaborators include ICAO, NCSC, EASA, IATA, ACI, Eurocontrol and UK CAA.

The recommendations and principles developed by the community have been published in a set of reports, allowing companies worldwide to learn from their insights and develop their own policies to ensure cybersecurity in aviation.

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Wide Variations in Post-COVID ‘Return to Normal’ Expectations

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London, UK, Covid-19 restrictions in place in Soho. IMF/Jeff Moore

A new IPSOS/World Economic Forum survey found that almost 60% expect a return to pre-COVID normal within the next 12 months. including 6% who think this is already the case, 9% who think it will take no more than three months, 13% four to six months, and 32% seven to 12 months (the median time). About one in five think it will take more than three years (10%) or that it will never happen (8%).

Views on when to expect a return to normal vary widely across countries: Over 70% of adults in Saudi Arabia, Russia, India, and mainland China are confident their life will return to pre-COVID normal within a year. In contrast, 80% in Japan and more than half in France, Italy, South Korea, and Spain expect it will take longer.

At a global level, expectations about how long it will take before one’s life can return to its pre-COVID normal and how long it will take for the pandemic to be contained are nearly identical. These findings suggest that people across the world consider that being able to return to “normal” life is entirely dependent on containing the pandemic.

An average of 45% of adults globally say their mental and emotional health has gotten worse since the beginning of the pandemic about a year ago. However, one in four say their mental health has improved since the beginning of the year (23%), about as many that say it has worsened (27%).

How long before coronavirus pandemic is contained?

Similar to life returning to pre-COVID normal, 58% on average across all countries and markets surveyed expect the pandemic to be contained within the next year, including 13% who think this is already the case or will happen within 3 months, 13% between four and six months and 32% between seven and 12 months (the median time in most markets).

Majorities in India, China, and Saudi Arabia think the pandemic is already contained or will be within the next 6 months. In contrast, four in five in Japan and more than half in Australia, France, Poland, Spain, and Sweden expect it will take more than a year.

Change in emotional and mental health since beginning of the pandemic about a year ago

On average across the 30 countries and markets surveyed, 45% of adults say their emotional and mental health has gotten worse since the beginning of the pandemic about a year ago, three times the proportion of adults who say it has improved (16%)

In 11 countries, at least half report a decline in their emotional and mental health with Turkey (61%), Chile (56%), and Hungary (56%) showing the largest proportions.

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African fisheries need reforms to boost resilience after Covid-19

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The African fisheries sector could benefit substantially from proper infrastructure and support services, which are generally lacking. The sector currently grapples with fragile value chains and marketing, weak management institutions and serious issues relating to the governance of fisheries resources.

These were the findings of a study that the African Natural Resources Centre conducted from March to May 2020. The centre is a non-lending department of the African Development Bank. The study focused on the impact of the Covid-19 pandemic in four countries – Morocco, Mauritania, Senegal and Seychelles. The countries’ economies depend heavily on marine fisheries. The fisheries sector is also a very large source of economic activity elsewhere in Africa. It provides millions of jobs all over the continent.

The study dwells on appropriate and timely measures that the four countries have taken to avoid severe supply disruptions, save thousands of jobs and maintain governance transparency amid the ongoing global uncertainty and crisis.

Infrastructure shortcomings include landing facilities, storage and processing capacity, social and sanitary equipment, water and power, ice production, and roads to access markets.

Based on the findings, researchers made recommendations to strengthen the resilience of Africa’s fisheries sector in the context of a prolonged crisis, and looking ahead to a post-Covid-19 recovery.

The report strongly advocates for:

– Increased acknowledgment of the essential role of marine fisheries stakeholders and the right of artisanal fishermen to access financial and material resources.

– Strengthening the collection of gender-disaggregated statistical data in a sector that employs a vast number of women and youth.

– Establishing infrastructure and support services at landing and processing sites of fishery products, with priority access to water.

– Investing in human capital to ensure high-level skills in the different areas of fisheries management.

– Improving governance frameworks by encouraging the private sector and civil society to participate in formulating sectoral policies and resource management measures.

The study recommends urgent reforms to make marine fisheries more resilient and enable the sector to contribute sustainably to the wealth of the continent’s coastal countries.

Marine fisheries are a crucial contributor to food security and quality of life in Africa. Good nutrition is a key factor to quality of life, and the marine fisheries sector supports the nutrition of more than 300 million people, the majority of whom are children, youth and women. It also provides more than 10 million direct and indirect jobs.

Dominated by artisanal fishing and traditional value chains, the fisheries sector in Africa is mainly informal and is rarely considered in public policies or in assessing the wealth of countries.

Like other sectors, the African fisheries sector has been severely hit by the Covid-19 pandemic. Covid has affected supply markets and regional trade. This has resulted in substantial economic losses for most households that depend on fisheries.

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