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Philippines: High impact projects and critical reforms key to regaining higher growth

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Amidst rising global uncertainties, the Philippine economy remains strong and is projected to grow 5.8 percent this year and 6.0 percent in 2020 and 2021, according to the Philippines Economic Update, released today by the World Bank.

Weakening global economy, rising protectionism, the United States – China trade spat, and the slowdown in public investments in the Philippines in the first half of the year have tempered the country’s growth prospects.

Nevertheless, strong private consumption – due to lower inflation, higher employment rates, robust remittances, and rising wages – and a recovery in public investment spending will keep the economy buoyant. Also, the services sector will drive growth fueled by the continuing expansion of financial services and tourism.

“Given the global environment, resuming the fast pace of expansion in infrastructure and human capital spending will be key for the Philippines to regain higher growth momentum while continuing to lay the foundation for greater inclusion,” said Mara K. Warwick, World Bank Country Director for Brunei, Malaysia, Thailand and the Philippines. “Timely passage of the 2020 budget and decisive action on the country’s tax reform program will remove uncertainties and help the private sector make timely decisions, boosting job creation.”

The report projects that Philippines will sustain progress in reducing poverty despite the temporary slowdown in economic growth in the first half of 2019. More workers are finding gainful employment outside agriculture, real wages are rising, and inflation rates are stabilizing. Also, the continuing implementation of social programs like the Pantawid Pamilya, or 4Ps, contributes significantly to poverty reduction.

Using the World Bank’s US$3.2 dollar-a-day poverty rate, the poverty incidence is estimated to have declined from 26.0 percent in 2015 to 20.8 percent in 2019, a result of growth of incomes among poor households. The poverty rate is expected to dip further to 19.7 percent in 2020 and 18.7 percent in 2021.

“In the medium term, accelerating implementation of high-impact infrastructure projects and the recently approved critical reforms like the Ease of Doing Business Law and liberalization of the rice trade will help the country sustain inclusive growth that generates high-paying jobs and reduces poverty,” said World Bank Senior Economist Rong Qian.

Qian added that the passage of investment-friendly reforms such as amendments to the Public Service Act to allow foreign ownership in key sectors including telecommunication and transportation services, and the Retail Trade Liberalization Act that will allow greater competition in the retail trade sector, can attract more foreign direct investment and boost local productivity.

The report also stresses that promoting competition to generate quality jobs will enhance the impact of growth on poverty reduction in the Philippines over the long term. As many critical sectors of the country are dominated by a few players, the report recommends reforms to enhance competition in Philippine markets, including:

Streamlining burdensome administrative procedures for businesses to make it easier to start a business, generating more competition in markets

Eliminating restrictions on foreign as well as domestic investors to help level the playfield.

Ensuring that state-owned enterprises compete on fair terms with private business, to promote more efficient use of public funds.

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Human Rights

Partnerships key to taking landlocked countries out of poverty

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The challenges faced by landlocked developing countries (LLDCs), some of the poorest in the world, can be overcome through more effective partnerships, UN Secretary-General António Guterres declared on Thursday, at a conference held at UN Headquarters in New York.

The Midterm Review of the 10-year Vienna Programme of Action For Landlocked Countries, is an opportunity for the international community to renew commitments made, to lifting LLDCs out of poverty.

Challenges they face include underdeveloped forms of connectivity, from roads to railways and internet infrastructure, a lack of access to sea ports, and poor integration into global and regional markets.

Cooperation amongst the countries concerned is therefore crucial, said the UN chief: “We need the right policy mix; increased investment, reliable transit infrastructure, efficient customs operations and improved access and use of technology”.

The international community should support landlocked countries, he said, in building up their private sectors, enhancing the business environment, and strengthening statistical systems, because policies must be based on data.

‘Headway in key areas’

The UN chief pointed to “headway in some key areas”. These include higher GDP in many of the countries; and progress on indicators related to health, education, energy, gender equality and ICT (Information and Communication Technology).

Transport connectivity is improving, noted Mr. Guterres, with transit and economic corridors developing. Examples of growing economic links include the African Continental Free Trade Agreement, and the World Trade Organization Trade Facilitation Agreement, which provide opportunities for landlocked countries to link up to external markets and global value chains.

Since the Vienna Programme was adopted in 2014, LLDCs are now benefiting from modest increases in development aid from governments, as well as increased aid for trade and cooperation between developing countries.

Struggling ‘in the shadows of historical injustices’

Muhammad-Bande, the President of the General Assembly, in his speech to the conference.

Ramped-up action is sorely needed if the international community is to change the “grim picture” of the current situation for LLDCs, many of which “continue to struggle in the shadows of historical injustices”, he said, going on to list some of the severe problems these countries face.

Economic growth in the landlocked developing countries has declined in the last five years, one third live in extreme poverty, and the average ranking for LLDCs in the United Nations Development Program (UNDP’s) Human Development Index lags behind the world average by 20 per cent.

Undernourishment in landlocked developing countries reached a rate of 23.2 per cent in 2016, and food insecurity affects 51.6 per cent of their population, a problem that is compounded by the effects of climate change. In addition, 40 per cent of the population of these nations do not have access to electricity.

Deal for landlocked countries a ‘testament to multilateralism’: GA President

Mr. Muhammad-Bande described the Political Declaration due to be adopted at the Midterm Review of the Vienna Programme as “a testament to multilateralism”, and a “roadmap by which we can align the objectives of the Programme with the Sustainable Development Goals (SDGs)” and, in particular, Sustainable Development Goal 1, which calls for the eradication of poverty.

The General Assembly President outlined the types of action that can support the sustainable development of landlocked developing countries.

Some government programmes and grassroots anti-corruption movements have used digital technology to tackle illicit financial flows; financing for micro, small and medium-sized enterprises needs to be strengthened; economic governance and business regulation should be improved; and technical support should be provided, for infrastructure and transport development projects.

“To ensure sustainable development for generations to come we must work together now”, said Mr. Muhammad-Bande. “Our actions must be guided by the spirit of cooperation and solidarity”.

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Energy News

Assessing the challenges and opportunities of Africa’s energy future

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The International Energy Agency has significantly deepened its engagement with Africa in recent years, including through greater dialogue with governments and business leaders, increased training programmes for policy makers and expanded analytical work.

Today, several ministers from African countries took part in a special roundtable event about the continent’s energy future that was hosted by the IEA ahead of the Agency’s biennial Ministerial Meeting. It was chaired by Amani Abou-Zeid, the African Union’s Commissioner for Infrastructure and Energy, and Alessandra Todde, Italy’s State Secretary of Economic Development.

The roundtable included the Energy Ministers of Morocco, Senegal and South Africa, as well as other key stakeholders from government, industry and international organisations. The discussions assessed Africa’s energy challenges, took stock of the findings from the IEA’s recent Africa Energy Outlook 2019 and explored the opportunities for further IEA engagement to help African countries’ achieve universal access to affordable, secure and sustainable energy.

“How Africa meets the energy needs of a fast-growing and increasingly urban population is crucial for its economic and energy future – and the world. That is why the IEA is strategically enhancing its engagement with African leaders and convening its partners here today,” said Dr Fatih Birol, the IEA’s Executive Director. “The IEA is fully committed to supporting African countries in achieving sustainable and prosperous energy transitions in the coming decades.”

In June, the African Union Commission and the IEA co-hosted their first joint ministerial forum, which brought together high-level representatives from government and industry in Addis Ababa to discuss the development of Africa’s energy sector. Dr Birol announced today that the second ministerial forum will take place in April 2020 and that South Africa has offered to host the event in line with its 2020 presidency of the African Union.

Following the meeting, the IEA and Senegal signed a Memorandum of Understanding to increase cooperation.

The 2019 IEA Ministerial Meeting is taking place in Paris on 5-6 December. It is chaired by Mr Michał Kurtyka, Poland’s Minister of Climate and the President of COP24. Ministers of IEA Member, Accession and Association countries and CEOs of leading companies are attending the meeting.

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EU Politics

8th Euronest Assembly: The future of relations with Eastern partners

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Energy security, EU-Eastern relations and geopolitical challenges are set to be among the focus points of the 8th session of the joint parliamentary assembly.

Members of the Euronest Parliamentary Assembly will meet in Tbilisi, Georgia, for the 8th Ordinary Session, from 8 to 10 December. The Assembly is comprised of 60 MEPs and 10 members from each of the participating parliaments of the Eastern European partners (Armenia, Azerbaijan, Georgia, Moldova and Ukraine).

Georgian Parliament Speaker Archil Talakvadze will open the session on 9 December. The meetings will be co-chaired by MEP Andrius Kubilius (EPP, LT) and Ivan Krulko, member of the Verkhovna Rada (Ukrainian parliament).

European Parliament President David Sassoli will be represented in Tbilisi by Vice-President Klara Dobrev (S&D, HU).

Political affairs, economic integration, energy security and social matters

The opening session will be preceded by several meetings of the different Euronest committees and working groups, focussing on a wide range of subjects.

Participants will adopt resolutions on political affairs, economic integration, energy security and social matters. As 2019 marks the 10th anniversary of the Eastern Partnership, members will also reflect on the future of this policy, in the run-up to the next Eastern Partnership Summit scheduled to take place in the spring of 2020.

Background

The Euronest PA was established on 3 May 2011 in Brussels, when the Presidents (or their representatives) of the Armenian, Azerbaijani, Georgian, Moldovan, Ukrainian and European Parliaments signed the Assembly’s Constitutive Act.

The mission of the Euronest Parliamentary Assembly is to promote the conditions necessary to accelerate political association and further economic integration between the EU and the Eastern European Partners, as well as to strengthen cooperation within the region and between the region and the EU. The multilateral Assembly contributes to strengthening, developing and making the Eastern Partnership visible.

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