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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 Monetary and fiscal stimulus is being withdrawn progressively in the OECD area.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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Jordan: US$85 million for a New Industry Development Fund

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The World Bank has approved US$85 million in financing for the Jordan Support for Industry Development Fund Project, which aims to promote investments and exports in the manufacturing sector through the operationalization of a new Industry Development Fund. The fund is one of the commitments Jordan has made under its Economic Priority Plan 2021–2023.

Jordan urgently needs to create inclusive and broad-based job opportunities to promote resilient recovery from the COVID-19 crisis, requiring a shift towards a resource-efficient, export- and investment-driven growth model. Manufacturing, among the largest employers in Jordan’s economy, suffered acute shortages of cash during the COVID-19 pandemic. To diversify and expand their exports, and generate more jobs, companies now need to move out of survival mode to a new level of competitiveness.  

The Government of Jordan is establishing the Industry Development Fund to put its development policies and programs on manufacturing into practice. The government asked for the World Bank’s support in designing and operationalizing the fund as an efficient, transparent, and effective delivery platform for support for firms, and as a key financial enabler for industrial transformation. Its focus will be upgrading and modernizing industries; export development and promotion; and incentivizing companies toward high performance in areas critical to the sector reaching its full potential, such as increased climate-responsiveness and female employment.  

The Industry Development Fund is a key instrument in our Economic Priority Plan 2021–2023 to help firms in the industrial sector recover and build back better following the COVID-19 crisis,” said H.E. Nasser Shraideh, Minister of Planning and International Cooperation of Jordan. “It will serve as a stimulus to promote private sector-led investment, as well as modernization, upgrading, and export development, which are key engines of growth for the Jordanian economy.

The project aims to support more than 500 export-oriented firms directly through the fund’s programs and to mobilize at least US$17 million in additional private capital. It will also support the building of effective delivery mechanisms and a robust governance and operational capacity, enabling the fund to support the transformation of the industrial sector in the longer term.

Jordan’s recovery from the COVID-19 pandemic has been broad-based, but many sub-sectors are operating below their pre-pandemic level and external shocks have led to higher unemployment, especially for women and the youth,” said Saroj Kumar Jha, Mashreq Regional Director, World Bank Group. “This project will complement the integrated package of support for private sector development that the Bank and the Government of Jordan are implementing to foster enhanced public-private partnerships for inclusive and resilient recovery and growth.” 

The main activities financed by the Fund will include: (i) Industry upgrading and export development programs; (ii) Outcome-based incentives program; and (iii) Easing access to export credit insurance and to new supply chain finance products.

The project prioritizes gender balance and includes measures to ensure the inclusion of women business leaders/owners and employees, and of various vulnerable groups in the fund’s programs.

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Tech News

Implications of remote conformity assessment for developing countries

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The United Nations Industrial Development Organization (UNIDO) is pleased to announce the launch of a publication titled “Remote conformity assessment in a digital world: Opportunities, challenges and implications for developing countries”.

The publication provides a high-level overview of how remote assessment/audit techniques have developed in recent years and applied in different conformity assessment contexts. It also highlights the associated benefits of such techniques along with the challenges and implications for the future. 

Quality Infrastructure is the combination of initiatives, institutions, organizations, activities, and people that help ensure products and services meet customers’ requirements. Conformity assessment is a central part of this important work as it links regulation, industry, and markets. Evidence shows that establishing a Quality Infrastructure can assist a nation in pursuing a development track in line with the Sustainable Development Goals.

Remote assessments/audits play a crucial role in the context of digital transformation of Quality Infrastructures around the world, with the global disruptions arising from the COVID-19 pandemic having accelerated this process and injected urgency into the adoption of new technologies. where the use of remote assessment techniques to ensure the continuity of conformity assessment and confidence in its outcomes became a strategic imperative.

The need to stay abreast of the latest developments to ensure that no country is left behind in the increasingly digitalized world of conformity assessment makes this publication relevant for developing countries and a wider audience. Pragmatic steps that can be taken to address this need are presented accordingly.

UNIDO remains committed to continuing its support to developing countries, assisting them in overcoming the challenges and making the most of the opportunities posed by the growing use of remote assessment techniques.

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Privacy vs Security in the online world

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New technological developments and the rise of the internet allowed many people access to the digital world by making it possible to do so from anywhere and anytime. But, with all its benefits, this has significantly increased the amount of data we have on the internet. From cookies to the browser and device fingerprinting, we leave data behind every time we visit a website. How private or secure is your data online?

What is the difference between privacy and security?

Some people use these terms interchangeably, but there is a difference between them. Privacy is related to your right to control your personal information and how that information is used, while security determines how that personal information is protected.

For example, you can choose to share your data on a social media platform, which is a matter of privacy, while how that platform protects that data is a matter of security. The same applies to signing on the eCommerce site. You are choosing to disclose your data to them to use their services, but it is up to them to keep your data safe, maintaining your privacy and security. If they sell or release your information to a third party, your privacy would be compromised, but not necessarily security. In a successful cyberattack, both your security and privacy have been compromised.

Compromised privacy doesn’t necessarily threaten your online safety, but it remains an essential aspect of it.

Dangers of privacy and security loss

With our growing online presence, more and more of our personal data ends up online. This data is in danger of being compromised by companies selling or sharing it with unauthorized 3rd parties to be used for advertising, political manipulation, or other nefarious purposes. The risk gets even higher on social media, where people reveal various details about them that malicious parties can use. Luckily, they are starting to realize the importance of data privacy. According to the research, 81% of people are more concerned about their social privacy than last year.

The loss of privacy is real, but how does this impact our security? The truth is it leaves us vulnerable to various types of cyberattacks and fraud attempts, such as data breaches and identity fraud. The threat from cybercriminals, hackers, and fraudsters keeps growing with our rising dependence on the internet. While the cyber attacks are nothing new, the truth is that the development of technology has allowed them to step up with their malicious attacks, making them harder to trace and able to affect more people than ever. According to the Telegraph, cyber fraud is currently the fastest-growing category of crime, and it shows no signs of slowing down. But does that mean you have to stop using the internet to remain safe from these threats? Of course not; you just need to take the proper steps to minimize the risk while enjoying your online life.

How can you ensure your privacy and security online?

With our digital footprints growing constantly, it is time to start taking necessary actions to protect ourselves.

  1. The first step you need to do is install Antivirus and Firewall programs to protect yourself from various cyber threats. Just remember to keep them up to date, and you will significantly reduce the danger.
  2. Practice good password hygiene. More than 80% of data breaches directly resulted from poor passwords, which is why you should never use easily guessable passwords such as your date of birth or even something simple like “123456”. You should also always choose unique and complex passwords for all of your accounts, making it harder for cybercriminals to gain access to different accounts.
  3. Reduce the risk of your account data being stolen and used for malicious purposes by not saving credit and debit cards in the system when making online purchases. The truth is that every website is vulnerable to attack. You don’t want to put yourself at unnecessary risk because you need to invest a few more seconds to type in your card details.
  4. Be mindful of what you share online and on social media. Most people are not aware of how public the data on social media actually is, and they keep oversharing. This can allow cyber criminals and fraudsters to discover important personal information and use it for their malicious actions. Review your privacy settings on social media sites and think twice before posting something personal.

Cybercriminals and fraudsters keep evolving their methods to exploit as many people as they can reach. Learn how to protect yourself and stay safe online.

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