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ADB Trims Growth Forecasts as Asia’s Biggest Economies Slow

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The Asian Development Bank (ADB) has trimmed its forecasts for economic growth in developing Asia this year and next year as growth in the People’s Republic of China (PRC) and India is weighed down by both external and domestic factors.

In a supplement to its Asian Development Outlook 2019 Update released in September, ADB now expects gross domestic product (GDP) in the region to expand 5.2% in both 2019 and 2020, down from the September forecast of 5.4% growth this year and 5.5% next year.

“While growth rates are still solid in developing Asia, persistent trade tensions have taken a toll on the region and are still the biggest risk to the longer-term economic outlook. Domestic investment is also weakening in many countries, as business sentiment has declined,” said ADB Chief Economist Mr. Yasuyuki Sawada. “Inflation, on the other hand, is ticking up on the back of higher food prices, as African swine fever has raised pork prices significantly.”

The supplement forecasts inflation of 2.8% in 2019 and 3.1% in 2020, up from the September prediction that prices would rise 2.7% this year and next.

In East Asia, growth in the PRC is now expected at 6.1% this year and 5.8% next year due to trade tensions and a slowdown in global activity coupled with weaker domestic demand, with family wallets being hit by pork prices that have doubled relative to a year ago. Growth could accelerate, however, should the United States and the PRC come to an agreement on trade, the report says. In September, ADB forecast GDP growth of 6.2% in 2019 and 6.0% in 2020.

Hong Kong, China, already in technical recession, will see severe downward pressures persist possibly into 2020. The economy is now expected to contract 1.2% this year and grow 0.3% next year.

In South Asia, India’s growth is now seen at a slower 5.1% in fiscal year 2019 as the foundering of a major nonbanking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch. Also, consumption was affected by slow job growth and rural distress aggravated by a poor harvest. Growth should pick up to 6.5% in fiscal year 2020 with supportive policies. In September, ADB forecast India’s GDP to grow 6.5% in 2019 and 7.2% in 2020.

In Southeast Asia, many countries are seeing continued export declines and weaker investment, and growth forecasts have been downgraded for Singapore and Thailand. GDP growth is expected to slow in the Pacific with activity in Fiji, the subregion’s second largest economy after Papua New Guinea, expected to be more subdued than previously anticipated.

Central Asia is the only subregion where prospects look a little brighter now than in September, largely thanks to increased public spending in Kazakhstan, the region’s largest economy. Central Asia is now forecast to grow 4.6% in 2019, up from the previous prediction for expansion of 4.4%.  The forecast for 2020 is for growth of 4.5%. Kazakhstan’s economy is seen expanding by 4.1% this year and 3.8% next year.

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Development

77 million children have spent 18 months out of class

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The UN Children’s Fund (UNICEF) says the world is facing an education crisis due to the COVID pandemic, that has left nearly 77 million children shut out of the classroom for the past 18 months.  

This Thursday, the UN agency is closing down its social media channels for the next 18 hours to send one message to the world: #ReopenSchools for in-person learning as soon as possible. 

The UN Educational, Scientific and Cultural Organization (UNESCO) is joining UNICEF, together with the World Bank, the European External Action Service (EEAS), the European Commission Humanitarian Aid operation, the LEGO Foundation and the WEF Global Shapers community of world youth.  

Right to education 

For UNICEF, the right to go to school is central to every child’s development, safety and well-being. Yet in too many countries, classrooms remain closed while social gatherings continue to take place in restaurants, salons and gyms. 

The agency believes “this generation of children and youth, cannot afford any more disruptions to their education.” 

New numbers from UNESCO, released this Thursday, show that schools are now fully open in 117 countries, with 539 million students back in class, ranging from pre-primary to secondary levels. 

This represents 35 per cent of the total student population across the world, compared to 16% who returned to school in September 2020, when schools were only open, or partially-open, in 94 countries. 

Around 117 million students, representing 7.5 per cent of the total, are still affected by complete school closures in 18 countries. The number of countries with partly open schools, has declined from 52 to 41 over the same period.  

In all countries that had prolonged full school closures, education was provided through a combination of online classes, printed modules, as well as tuition through TV and radio networks. 

Schools can reopen safely 

UNESCO and its Global Education Coalition partners have been advocating for the safe reopening of schools, urging full closures to be used as a measure of last resort. 

Since the onset of the pandemic, schools were completely closed for an average of 18 weeks (4.5 months) worldwide. If partial closures are accounted for, the average duration of closures represents 34 weeks (8.5 months) worldwide, or nearly a full academic year. 

For UNESCO, the past two academic years have resulted in learning losses and increased drop-out rates, impacting the most vulnerable students disproportionately.  

Schools in most countries have adopted some forms of sanitation protocol such as wearing masks, using hand sanitizers, improving ventilation and social distancing, which were also key to re-opening schools last year. 

Some countries have also introduced large scale testing as well as temporary classroom and school closures when the virus is detected.  

Vaccination key 

Rising vaccination rates among both general population and teaching staff, has also been a key factor in reopening schools. 

The vaccination of teachers has been prioritized in around 80 countries, allowing for the inoculation of some 42 million teachers. In a handful of countries, the vaccination of students aged 12 and over, is an important factor in determining the full re-opening of schools. 

Action to accelerate the recovery of learning losses remains an essential component of national COVID-19 education responses. For that, UNESCO says teachers and educators need adequate support and preparation. 

Connectivity and bridging the digital divide also remain key priorities in building the resilience of education systems and providing hybrid learning opportunities. 

For that reason, UNESCO, UNICEF and the World Bank have partnered in an initiative called Mission: Recovering Education 2021, that supports governments in bringing all learners back to school, run programmes to help them catch up on lost learning, and prepare teachers to address learning losses and incorporate new digital technology.

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Environment

Paris climate deal could go up in smoke without action

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Unless wealthy nations commit to tackling emissions now, the world is on a “catastrophic pathway” to 2.7-degrees of heating by the end of the century, UN Secretary General António Guterres warned on Friday.

This is far beyond the one to 1.5 degree Celsius threshold, agreed by the international community as part of the 2015 Paris Agreement.

The UN chief’s remarks came after the UN’s climate agency (UNFCCC) published an update on national climate action plans (officially known as Nationally Determined Contributions or NDCs) submitted by the 191 countries which signed Agreement.

The report indicates that while there is a clear trend that greenhouse gas emissions are being reduced over time, nations must urgently redouble their climate efforts if they are to prevent disastrous global heating in the future.

Not enough

The document includes updates to the NDCs of 113 countries that represent around 49% of global emissions, including the nations of the European Union and the United States.

Those countries overall expect their greenhouse gas emissions to decrease by 12% in 2030 compared to 2010. “This is an important step,” the report points out, but insufficient, as highlighted by Mr. Guterres at Friday’s Forum of Major Economies on Energy and Climate, hosted by the President of the United States, Joe Biden

“We need a 45 per cent cut in emissions by 2030, to reach carbon neutrality by mid-century…It is clear that everyone must assume their responsibilities”, he emphasized.

70 countries indicated their embrace of carbon neutrality goals by around the middle of the century. If this materializes, it could lead to even greater emissions reductions, of about 26% by 2030, compared to 2010, the report explains.

Code Red

However, with national plans staying the way they are right now for all 191 countries, average global emissions in 2030 compared to 2010, instead of decreasing, will increase by around 16%.

According to the latest IPCC findings, that would mean that unless climate action is taken immediately, it may lead to a temperature rise of about 2.7C, by the end of this century.

“The recent report of the Intergovernmental Panel on Climate Change (IPCC) was a code red for humanity. But it also made clear that it is not too late to meet the Paris Agreement 1.5-degree target. We have the tools to achieve this target. But we are rapidly running out of time”, the UN chief highlighted.

The challenge

The Secretary General highlighted a particular challenge: energy still obtained from coal. “If all planned coal power plants become operational, we will not only be clearly above 1.5 degrees – we will be well above 2 degrees. The Paris targets would go up in smoke”.

Mr. Guterres urged the creation of “coalitions of solidarity” between countries that still depend heavily on coal, and countries that have the financial and technical resources to support transitions to cleaner energy sources.

Without pledges and financial commitments from industrialised nations to make this happen, “there is a high risk of failure of COP26”, Mr. Guterres continued, referring to the pivotal UN Climate summit in Glasgow in six weeks’ time.

“G20 nations account for 80% of global emissions. Their leadership is needed more than ever. The decisions they take now will determine whether the promise made at Paris is kept or broken”, he warned.

There’s still time

Patricia Espinosa, Executive Secretary of UN Climate Change, clarified during a press conference that countries can submit or update their national plans “at any time”, including in the run-up to COP26.

The agency highlighted some good news. The new or updated plans included in the report, show a marked improvement in the quality of information presented, for both mitigation and adaptation, and tend to be aligned with broader long-term, low-emission development goals, the achievement of carbon neutrality, national legislative/regulatory/planning processes, and other international frameworks such as Sustainable Development Goals (SDGs).

The UN chief was clear that by COP26, all nations should submit more ambitions plans that help to place the world on a 1.5-degree pathway.

“We also need developed nations to finally deliver on the US100 billion commitment promised over a decade ago in support to developing countries. The Climate Finance report published today by the Organisation for Economic Co-operation and Development (OECD) shows that this goal has not been reached either”.

A sizeable number of national climate plans from developing countries, which define targets and actions to reduce emissions, contain conditional commitments which can only be implemented with access to enhanced financial resources and other support.

Stop ignoring science

For Mr. Guterres, the fight against climate change will only succeed if everyone comes together to promote more ambition, more cooperation and more credibility.

No more ignoring science. No more ignoring the demands of people everywhere. It is time for leaders to stand and deliver, or people in all countries will pay a tragic price”.

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Development

Rising demand for agricultural products adds to competing pressures on tropical forest landscapes

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tropical forest

Annual consumption of food and agriculture products rose by 48% between 2001 and 2018 – more than twice the rate of increase in human population – as reported in a new analysis published by the Tropical Forest Alliance at the World Economic Forum entitled Forests, food systems and livelihoods: Trends, forecasts and solutions to reframe approaches to protecting forests.

The report, which tracks the relationship between the rising demand for food and agricultural products and deforestation, paints a picture of increasing competing demands on tropical forest landscapes. Since 2001, 160 million people have been lifted out of poverty and undernourishment increasing the per capita food consumption, particularly protein which has risen 45% since 2000.

In producer countries, these trends are often linked to economic development and rural livelihoods that creates a set of complex trade-offs for decision makers. For example, soybeans are now the most valuable export product for Brazil, and around 16.3 million people (12% of the total workforce) are employed in the palm oil industry in Indonesia.

The report also highlights the significant loss of primary forests, which are rich stores of carbon and biodiversity. An area exceeding 60 million hectares of primary tropical forests have been lost since 2002 – almost the size of France. The loss was 12% higher in 2020 than the previous year, despite all the efforts by governments, businesses and civil society. More than 80% of this deforestation happened in landscapes where agriculture is the dominant driver and much of this is linked to the production of globally traded commodities including soy, palm oil, cattle, cocoa, coffee and wood pulp.

In the face of this reality, the report concludes that those working to reverse deforestation need to deploy systemic solutions that take into account the multiple competing demands on these landscapes. For example, incentives can be provided for farmers to conserve more while producing food, with potential sources coming from both carbon finance and domestic finance for rural credit. More effort needs to be applied to boost productivity sustainably, particularly for smallholder farmers in the face of greater climatic stress. Improved technical assistance and new plant material to help increase yields, as well as support with the diversification of income streams, are essential.

Mr Samuel Abu Jinapor, the Minister of Lands and Natural Resources, Ghana says: “The time for action is now. We will pursue progressive policies with the overarching view to restoring the forest cover of Ghana, thereby contributing to the global effort against climate change.”

Justin Adams, Executive Director, Tropical Forest Alliance, says: “No single policy or solution can resolve this. Commodity-driven deforestation must not be treated in isolation – either as a purely environmental issue or a supply-chain problem. Keeping forests standing is linked directly to sustaining rural livelihoods, ensuring food security for a growing global population and supporting economic development. Crucially, the community of action working on this issue must broaden beyond those engaged at the forest frontier and environmental issues to include actors in the food system more broadly, such as farmers, local communities, local businesses and local governments.”

There is some evidence that private sector supply-chain strategies are helping to reduce deforestation. For example, Nestlé has assessed that 90% of key ingredients – including palm oil, sugar, soy and meat – are deforestation-free as of last year, and has committed to 100% deforestation-free products by 2025. Magdi Batato, the Executive Vice President and Head of Operations of Nestlé says: “A forest positive future is possible if the private sector collectively moves its focus on achieving a positive impact in the critical landscapes that underpin our food systems, and if we work hand-in-hand with farmers and local communities, and governments to form wider solutions across local, regional and global levels. The benefits are numerous: more resilient communities and livelihoods, more sustainable food systems, and a healthier planet.”

While many companies are committing to ambitious efforts in their own supply chains, it is also critical that this is done in conjunction with a broader sector-wide transformation to reduce net deforestation. Landscape-scale or jurisdictional approaches, which promote sustainable practices by rooting them in local governance systems, offer a practical way for both companies and governments to collaborate.

Christine Montenegro McGrath, Vice President and Chief Global Impact and Sustainability, Mondelēz International and Co-Chair, Consumer Goods Forum Forest Positive Coalition of Action says: “Important shifts are taking place – and as we look ahead to the UN Food Systems Summit and COP26 this year – we need to integrate food production as a critical part of the collective action required to meet both the Paris Agreement and goals on biodiversity. This report shows that landscape-scale initiatives provide a crucial piece of that puzzle for businesses who are on the journey to becoming forest-positive.”

The Intergovernmental Panel on Climate Change (IPCC) last month provided alarming evidence about the irreversible changes to the climate including for forests, and has also established that climate change is already having an adverse impact on food security and terrestrial ecosystems, with the tropics among the most vulnerable regions in terms of crop yields. This report predicts a shrinking agricultural labour force, posing even further risks for agricultural production.

President of the World Economic Forum Borge Brende says: “This combination of risks from climate change and demographic shifts suggests that the rural development models that have underpinned the expansion of tropical agriculture in the first two decades of the century are coming under increasing pressure from several angles. This underpins the need for a multistakeholder approach to find systemic solutions exemplified by the work of the Tropical Forest Alliance and the FACT Dialogue that will be presenting its findings at COP26 in Glasgow.”

Finally, the report points to the need to tackle data gaps that can enhance transparency in supply chains. There have been a number of promising innovations in recent years in improving transparency and data quality, especially the use of satellite imagery. However, despite this progress, gaps remain, including concession boundary maps, trade and export data, distinguishing between tree cover loss and deforestation, spatial data on crop production, incorporating information on time lags (between deforestation and associated production) and improving the rigour by which drivers of deforestation are understood.

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