Afghanistan’s recent economic recovery may be at risk, according to the World Bank’s latest Afghanistan Development Update.
Released today, the twice-a-year Update states that following the economic shock of the withdrawal of international troops, the associated decline in aid and deterioration in security, and the period of political instability after the 2014 elections, the Afghan economy has slowly regained momentum as reforms have been implemented and confidence restored. From a low of 1.5 percent in 2015, real GDP growth accelerated to 2.3 percent in 2016, and reached 2.7 percent in 2017 .
However, this trend now appears to be at risk, with increasing election-related violence, declining business confidence, worsening drought conditions, and apparent slowing of economic activity. Growth is projected at 2.4 percent in 2018, with substantial downside risks arising from the prospects of political instability around upcoming parliamentary and district council elections and presidential and provincial council elections, scheduled for October 2018 and April 2019 respectively.
“At the current juncture, the most important priority for the government and its international partners is to maintain public confidence to support growth and job creation,” said Shubham Chaudhuri, World Bank Country Director for Afghanistan. “More than half of Afghans now live in poverty. We cannot afford to see the current momentum lost.”
According to the World Bank, government macroeconomic policies remain appropriate in the current conditions. The fiscal deficit for 2017 was low at around 0.5 percent of GDP, and a similar deficit is expected in 2018. The deficit will be financed largely from cash reserves, which remain at comfortable levels. Revenues remain strong, with domestic revenues reaching a new high of 12.3 percent of GDP in 2017. Consumer price inflation remained moderate in 2017, at around 3.1 percent, and is expected to remain at moderate levels through 2018.
According to Chaudhuri, sustaining the recent recovery will require enhanced government efforts to improve the business environment and catalyze private investment and job creation while ensuring smooth election processes. He noted that the international community also has a key role to play: “Sustaining international support is critical to overall confidence and underpins the capacity of the government to implement the reforms we all view as vital.”
Assuming a relatively smooth election process, no further deterioration of the security environment, and the absence of political instability that followed 2014 elections, the World Bank is projecting a gradually accelerating growth over coming years. Growth is expected to reach 2.8 percent in 2019 before accelerating gradually to 3.6 percent in 2021. Chaudhuri noted that much faster rates of growth would be required to make a substantial impact on poverty. “Significantly faster growth could be achieved by mobilizing investment in extractives, energy and connectivity, building and harnessing the skills of Afghanistan’s youth and women, and taking steps to realize the job-creation potential of agriculture and agribusinesses” he said.
ADB Project to Improve Fiscal Management, Develop Capital Markets in Armenia
The Asian Development Bank (ADB) has approved a $40 million-equivalent policy-based loan attached to reforms that help strengthen fiscal sustainability and develop the financial and capital markets in Armenia. These are crucial enablers of private sector development.
Armenia’s economic growth over the last few years has been hampered by low levels of investment, both foreign and domestic, given the high costs of local currency finance and related constraints in the financial system. Efficiency-promoting upgrades in public investment and fiscal management are also needed to ensure sustained improvements in fiscal outlook and sovereign risk pricing.
“Financial markets remain nascent in Armenia, which limits the development of the country’s private sector and the banking industry,” said ADB Senior Financial Sector Economist for Central and West Asia Mr. João Farinha Fernandes. “This also constrains public finance and fiscal management, while exposing the economy to financial stability risks. ADB’s assistance is intended to help ensure that Armenia develops a conducive fiscal and financial intermediation environment where private sector players, both big and small, can contribute to growth and development.”
ADB approved a $50 million policy-based loan in November 2018 as part of an ongoing programmatic engagement on financial reforms to strengthen public debt and fiscal risk management, and to develop financial markets in Armenia.
The Second Public Efficiency and Financial Markets Program continues these reforms by strengthening the effectiveness of the government’s fiscal risk management function; promoting the development of fiscally responsible public–private partnerships; and enhancing market transparency and predictability in public debt management. The program will also improve the infrastructure of the government securities market and money market infrastructure, enhancing the sustainability and resilience of Armenia’s finance sector.
Bangladesh Can Boost its Exports with Better Logistics
To meet the needs of its growing economy and to boost export growth, Bangladesh needs to improve its transport and logistics systems, says a new World Bank report launched today.
The report Moving Forward: Connectivity and Logistics to Sustain Bangladesh’s Success, finds that by making logistics more efficient, Bangladesh can significantly boost export growth, maintain its position as a leading ready-made-garments and textile producer, and create more jobs. The report notes that congestion on roads and in seaports, high logistics costs, inadequate infrastructure, distorted logistics service markets, and fragmented governance hamper manufacturing and freight, further eroding Bangladesh’s competitive edge and putting its robust growth path at risk.
“Bangladesh’s congested transportation and often unsophisticated logistics systems impose high costs to the economy,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. “By making its logistics more efficient, Bangladesh can significantly optimize its connectivity, business environment, and competitiveness, putting the country on the right path to become a dynamic upper-middle-income country.”
Efficient logistics, the report argues, has become one of the main drivers for global trade competitiveness and export growth and diversification. For Bangladesh, improving its logistics performance provides an opportunity to increase its world market share in garments and textiles, which account for 84 percent of its total exports, expand into new markets, and diversify its manufacturing and agriculture into high-value products.
The report notes that improving Bangladesh’s logistics requires a system-wide approach based on greater coordination among all public institutions involved in logistics and with the private sector, increasing the effective capacity of core infrastructure, and removing distortions in logistics service markets to reduce costs and improve quality. At a regional level, harmonizing its logistics systems and aligning its customs with that of its neighbors could turn Bangladesh into an important node for regional freight flows and further boost its trade.
“There’s no doubt that reforms and investments for better transport and logistics will yield Bangladesh substantial economic benefits and strengthen its competitive advantage,” said Matías Herrera Dappe, Senior Economist at the World Bank and author of the report. “But the solution to logistics is not just to invest more but to invest better, by focusing on the service gap, and creating the incentives for high quality and competitive logistics services.”
New development models to drive growth and employment for youth in Africa
The United Nations Environment Programme (UNEP) today launched the Global Environment Outlook-6 (GEO-6) for Youth in Africa report on the margins of the 17th session of the African Ministerial Conference on the Environment (AMCEN).
The report analyses the economic opportunities that Africa’s natural resources can provide for job creation and sustainable development. It also provides a package of solutions to tackle Africa’s youth unemployment through the Green Economy.
“This Publication is anchored substantively in the UNEP’s sixth Global Environment Outlook (GEO-6) Regional Assessment for Africa,” said Juliette Biao Koudenoukpo, Director of UNEP’s Regional Office for Africa. “This Assessment has a very clear message; Africa has an opportunity to use its large young population to drive its growth.”
Africa’s youth remains the most hit by unemployment. One-third of Africa’s 420 million youth aged 15 to 35 are unemployed. Of these, 35 per cent are vulnerably employed and 19 per cent are inactive. These numbers will increase dramatically unless urgent actions are not taken.
The report recommends that Africa’s natural capital should be managed sustainably to enhance the livelihoods of African young population, create more sustainable and decent jobs as well as increase social and economic cohesion.
“The Green Economy calls for a paradigm shift in the way that we produce and consume. If young people are the centre of such a shift, they will secure a sustainable future replete with sustainable livelihoods,” said Professor Lee White, Minister for Environment, Forest and Oceans of Gabon and outgoing President of AMCEN. “The Global Environment Outlook-6 for Youth, Africa: A Wealth of Green Opportunities digs deep into that future and shows young people how they can secure their livelihoods through green jobs.”
Natural resources remain a key source of employment in Africa. Eight out of ten people’s employment on the continent are supported by natural resources. Nearly six million Africans are employed in the fisheries and aquaculture sector, ten million people work in the wildlife sector and an average of 54 per cent in the agricultural sector.
The report includes case studies and success stories on African youth who have invested in natural resources to develop entrepreneurship, improve their knowledge and skills as well as create jobs and sustain their livelihoods.
The report calls on governments to encourage youth to invest in green economy through creating platforms for innovation in sustainable development. While confirming the potential of youth in leading green growth in Africa, the report strongly establishes the correlation between green economy and decent jobs.
Brazil must immediately end threats to independence and capacity of law enforcement to fight corruption
The OECD Working Group on Bribery urges Brazil, one of the founding Parties to the Anti-Bribery Convention since 1997, to...
The future of Brexit: Where will Boris Johnson’s “fatal strategy” lead Britain to?
British Prime Minister Boris Johnson will attempt to negotiate a new deal with the EU on Brexit in the course...
Hilton’s Hidden Gems Series: Bentonville, Arkansas
The first Hidden Gem of the series is Bentonville, Arkansas (yes, the home of Walmart, though that wasn’t a factor...
Bulgarian far-right to shut down largest human rights NGO in Bulgaria
“Why don’t they defend those who get robbed? Why are they only defending those that have trouble with the police?...
Strategic Black Sea falls by the wayside in impeachment controversy
Presidents Donald J. Trump and Recep Tayyip Erdogan had a plateful of thorny issues on their agenda when they met...
The coup in Bolivia shines yet more dark light on America
Just when one might have thought things geopolitical might be about to turn for the better, which means the worldwide...
World Energy Outlook 2019 highlights deep disparities in the global energy system
Deep disparities define today’s energy world. The dissonance between well-supplied oil markets and growing geopolitical tensions and uncertainties. The gap...
Middle East3 days ago
Beyond the dire needs of Iraq’s demonstration: National renaissance and a new challenge to Iran
Middle East2 days ago
Gulf soccer suggests that “The Times They Are a-Changin”
Intelligence2 days ago
Lesson to be Learn from Monsanto’s Involvement in the Vietnamese War: The Agent Orange
Middle East1 day ago
Soleimani in Iraq
Reports2 days ago
Child labour and human trafficking remain important concerns in global supply chains
Europe2 days ago
The Decay of Western Democracy
Middle East2 days ago
Trump’s support for Erdogan’s plans in Syria gives the green light to potential Turkish genocide of the Kurds
Russia3 days ago
Sergey Lavrov: Violations of journalistic rights and discrimination against media are increasingly evident