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Global growth is slowing amid rising trade and financial risks

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Global economic growth remains strong but has passed its recent peak and faces escalating risks including rising trade tensions and tightening financial conditions, according to the OECD’s latest Economic Outlook.

Growth forecasts for next year have been revised down for most of the world’s major economies. Global GDP is now expected to expand by 3.5% in 2019, compared with the 3.7% forecast in last May’s Outlook, and by 3.5% in 2020.

In many countries, unemployment is at record lows and labour shortages are beginning to emerge. But rising risks could undermine the projected soft landing from the slowdown. Trade growth and investment have been slackening on the back of tariff hikes. Higher interest rates and an appreciating US dollar have resulted in an outflow of capital from emerging economies and are weakening their currencies. Monetary and fiscal stimulus is being withdrawn progressively in the OECD area.

The shakier outlook in 2019 reflects deteriorating prospects, principally in emerging markets such as Turkey, Argentina and Brazil, while the further slowdown in 2020 is more a reflection of developments in advanced economies as slower trade and lower fiscal and monetary support take their toll.

Presenting the Outlook, OECD Secretary-General Angel Gurría said: “Trade conflicts and political uncertainty are adding to the difficulties governments face in ensuring that economic growth remains strong, sustainable and inclusive.”

“We urge policy-makers to help restore confidence in the international rules-based trading system and to implement reforms that boost growth and raise living standards – particularly for the most vulnerable.”

The Outlook says trade tensions are already harming global GDP and trade, and estimates that if the US hikes tariffs on all Chinese goods to 25%, with retaliatory action being taken by China, world economic activity could be much weaker. By 2021, world GDP would be hit by 0.5%, by an estimated 0.8% in the US and by 1% in China. Greater uncertainty would add to these negative effects and result in weaker investment around the world. The Outlook also shows that annual shipping traffic growth at container ports, which represents around 80% of international merchandise trade, has fallen to below 3% from close to 6% in 2017.

Growth in China has eased over the course of 2018 amid tighter rules on “shadow bank” financial intermediaries outside the formal banking sector, a more rigorous approval process for local government investment and new US tariffs on Chinese imports. Stimulus measures and easier financial conditions by the central bank may help to bolster slowing growth and help engineer a soft landing, but could also aggravate risks to financial stability, says the Outlook. A much sharper slowdown in Chinese growth would damage global growth significantly, particularly if it were to hit financial market confidence.

With very low interest rates in many countries – particularly in the euro area – and historically high  debt-to-GDP levels (both public and private), policy-makers’ room for manoeuvre in case of a more marked global downturn is limited. The Outlook says it is important to maintain the capacity for tax and spending policies to stimulate demand if growth weakens sharply. Although such fiscal space is limited, co-ordinated action will be far more effective than countries going it alone. Such action should be focussed on  growth-friendly measures, such as investment in physical and digital infrastructure and targeting consumption spending more towards the less well-off.

Laurence Boone, OECD Chief Economist, said: “There are few indications at present that the slowdown will be more severe than projected. But the risks are high enough to raise the alarm and prepare for any storms ahead. Cooperation on fiscal policy at the global and euro level will be needed.”

She added: “Shoring up the global economy also involves responding to people’s concerns about the lack of improvements in wages, living standards and opportunities. Promoting competition to improve business dynamics can help by increasing workers’ bargaining position and lowering prices for consumers. Investing in skills is also crucial. It raises productivity and income and reduces inequality between workers.”

A special chapter in the Outlook shows how, as digitalisation spreads, the divide between high-skill, low-routine jobs and low-skill, high-routine work continues to grow, posing the risk of further widening inequalities. It says strengthening product market competition would not only prompt wider diffusion of new technologies, thereby raising productivity growth, but also help transfer output and efficiency gains to wages.

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Philippines drug campaign directive seen as ‘permission to kill’

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Housing in Tondo, Manila, Philippines. (file) Danilo Pinzon/World Bank

A campaign to eradicate illegal drugs in the Philippines that began in 2016 has led to the killing of at least 8,600 people but the real figure could be three times that number, the UN human rights office, OHCHR, said on Thursday. In a report citing “near-impunity” for the killings, which have continued along with other alleged abuses during the COVID-19 pandemic, the UN office noted that the High Commissioner for Human Rights stood ready to assist “credible efforts towards accountability”, both nationally and internationally.

“The Philippines faces major challenges – structural poverty, inequality, armed conflict, frequent natural disasters, and now the COVID-19 crisis”, Michelle Bachelet said in a statement, adding that it was “vital the Government’s responses be grounded in human-rights approaches…Unfortunately, the report has documented deep-seated impunity for serious human rights violations, and victims have been deprived of justice for the killings of their loved ones. Their testimonies are heartbreaking.”

‘Neutralization’ of suspects

According to the report – mandated by the Human Rights Council in Geneva in 2019 amid widespread international concern – police forces received a “command circular” containing terminology referring to the “negation” and “neutralization” of drug suspects, echoing pledges made by President Rodrigo Duterte.

“This ominous-sounding language was never really defined in this command circular, but this language, coupled with verbal encouragement at the highest level of government for police to kill drug suspects, may have been interpreted as permission to kill”, co-author Ravina Shamdasani said.

She noted that raids on private households were routinely carried out without warrants, while police reports where alleged drug suspects had been killed, shared “very similar

language”, raising the question whether they had been completed “pro forma”, rather than describing operations as they really happened.

Self-defence in question

Ms. Shamdasani also highlighted police claims of “self-defence” after it was found that officers “repeatedly recovered guns bearing the same serial numbers from different victims in different locations”, suggesting some victims were unarmed at the time of their killing.

Arrests of suspected drug offenders have also contributed to a 534 per cent prison congestion rate – among the highest in the world, the UN report noted.

Anti-terror law ‘makes things much worse’

The report also warned that proposed new anti-terror legislation grants even more sweeping powers to security services.

Among Government proposals are extensions to the length of time individuals can be held for questioning without warrant, from three days to potentially more than three weeks.

“This new proposed anti-terrorism law makes it much worse,” Ms. Shamdasani insisted. “There is much more discretion given to the authorities in their designation of individuals and organisations as terrorists, there is really not the opportunity for individuals to present their case (and) there’s no explicit provision, mandating a hearing.”

These concerns come amid a backdrop of “the vilification of dissent”, the UN official continued, along with attacks against those critical of the authorities that the report insists are “increasingly institutionalized and normalized in ways that will be very difficult to reverse”.

Civil society victims

According to OHCHR, between 2015 and 2019, at least 248 human rights defenders, legal professionals, journalists and trade unionists, have been killed in relation to their work in the Philippines.

Highlighting reports of death threats and the harassment of human rights defenders, Ms. Shamdasani explained that this included posters “that are plastered across, for example, Negros Island, where human rights defenders are called terrorists. They are ‘red tagged’ and they’re equated with the terrorist wing, the armed wing of the Communist Party…In

many of these posters, human rights defenders who were depicted were subsequently killed.”

Successive administrations had placed “an overarching focus on public order and national security” at the expense of human rights, Ms. Shamdasani said, suggesting that current Government policy represented a “continuum” of previous administrations.

“Of course, preventing and countering of violent extremism is important and tackling the impact of illicit drugs and crime is very important,” she explained, “but it is essential that this be done in line with the international human rights obligations of the State, in line with the due process rights of individuals, otherwise you are trying to resolve one issue by perpetrating massive human rights violations.”

COVID lockdown enforcement

The arrival of the new coronavirus had not caused a change in Government security policy, the report noted, with killings confirmed of drug suspects and human rights defenders in the first four months of the year.

“The violations that we document in the report are very much ongoing”, said Ms. Shamdasani. “The killing and the campaign against illegal drugs are not over, even in the context of the COVID pandemic.”

Attacks against human rights defenders and raids on the houses of civil society activists have continued, the OHCHR official added, along with the filing of sedition charges against political opponents and the criminalisation of dissent on social media.

“There are also concerns about the use of force in the enforcement of quarantine”, she said. “We’ve seen worrying reports of people being humiliated, there was one report of young people being held in dog cages in the sun” for breaking curfew.

The OHCHR report is based on 893 written submissions, with substantial input from the Government of the Philippines, analysis of legislation, police reports, court documents, videos, photos and other open source material, as well as interviews with victims and witnesses.

It is due to be discussed at the next UN Human Rights Council session. 

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India must follow Supreme Court orders to protect 100 million migrant workers

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Migrant workers in India cook a meal. World Bank/Curt Carnemark

The Indian Government must urgently comply with a Supreme Court order to ensure the wellbeing of more than 100 million migrant workers, after coronavirus measures left them jobless, forcing them to travel long distances home, UN independent human rights experts said on Thursday.

“We are appalled at the disregard shown by the Indian Government towards internal migrant laborers, especially those who belong to marginalized minorities and lower castes”, said the Special Rapporteurs on the right to housing, Balakrishnan Rajagopal, and on extreme poverty, Olivier De Schutter.

Instead of protecting their rights, the experts maintained that the Government has not only failed to address migrants’ “dire humanitarian situation” but further exacerbated their vulnerability, “with police brutality and by failing to stop their stigmatization as ‘virus carriers’”.

Heed the Supreme Court

After losing their income and with many migrants forced by their landlords to vacate their homes, the experts said many were living in intolerable conditions, hungry and without shelter, saying: “We hope the Supreme Court order will be promptly implemented and help to dramatically improve the situation of internal migrant workers”.

The Supreme Court has ordered the Government to properly register them, ensure free transportation and provide the migrants with shelter, food and water until they reach their homes. 

Moreover, railway companies are mandated to ensure trains are available to transport them back to home villages, as requested by the Government.

Inadequate relief 

Many internal migrants have also been assaulted by police for violating the sudden lockdown orders put in place by the Indian Government on 24 March, which, that took no account of the difficulties many vulnerable people faced in complying with them.

“While we applaud the Government’s efforts so far to provide ‘relief packages’ for people living in poverty, and to schedule extra train rides, these have been clearly inadequate and insufficient due to the vast majority of internal migrant workers not qualifying for relief packages, and the lack of coordination among state governments for the transportation of internal migrants”, the independent experts said.

Although the scale of the COVID-19 crisis in India is “testing the Government’s commitment to protect the rights of the most vulnerable members of society”, they maintained that by urgently assisting internal migrant workers, in compliance with Supreme Court’s order, “it will give the Government the opportunity to show its willingness to comply with its responsibilities under human rights law.”

The experts’ call, also conveyed directly to the Indian Government, has been endorsed by Special Rapporteur on the right to food, Michael Fakhri; the Special Rapporteur on the right to physical and mental health, Dainius Pūras; and the Special Rapporteur on minority issues, Fernand de Varennes.

Special Rapporteurs and independent experts are appointed by the Geneva-based UN Human Rights Council to examine and report back on a specific human rights theme or a country situation. The positions are honorary and the experts are not UN staff, nor are they paid for their work.

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Environment

May confirmed as warmest on record, CO2 levels hit new high despite COVID economic slowdown

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Last month was the warmest May on record and carbon dioxide levels also hit a new high despite the economic slowdown from COVID-19, the World Meteorological Organization (WMO) said on Friday, in an urgent appeal for Member States to renew their efforts to tackle climate threats.

“Governments are going to invest in recovery, and there’s an opportunity to tackle the climate as part of the recovery programme”, said WMO Secretary-General Petteri Taalas.

Opportunities ahead

He added that if this course of action was taken, “there was an opportunity to start bending the curve (on emissions) in the coming five years”.

The appeal coincides with World Environment Day, celebrated annually on 5 June, and a warning that warmer temperatures and higher greenhouse gas concentrations will have a major impact on biodiversity, socio-economic development and human well-being.

Echoing the call that it is time to grow back greener and build back better for people and the planet, UN Secretary-General António Guterres said that Nature was “sending us a clear message: we are harming the natural world – to our own detriment. Habitat degradation and biodiversity loss are accelerating.”

Climate and coronavirus

“Climate disruption is getting worse. Fires, floods, droughts and superstorms are more frequent and damaging,” said the UN chief. “Oceans are heating and acidifying, destroying coral ecosystems. And now, a new coronavirus is raging, undermining health and livelihoods. To care for humanity, we must care for nature.”

Any industrial and economic slowdown from COVID-19 is no substitute for sustained, coordinated action to reduce greenhouse gas emissions, Mr Taalas explained. 

This is because gases such as carbon dioxide and methane last in the atmosphere for hundreds of years, so any short-term effects seen during lockdown is not expected to have a long-term benefit.

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