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COVID-19 to Impact Lao PDR Growth, Debt in 2020

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Lao PDR’s economic growth is projected to decline in 2020 due to the impact of the COVID-19 pandemic and measures to contain its spread, to 1 percent in the baseline scenario and negative 1.8 percent in a lower-case scenario. The economic downturn has particularly affected the service sector, according to the latest edition of the World Bank’s Economic Monitor for Lao PDR: Lao PDR in the Time of COVID-19, released today.

The impact of the COVID-19 pandemic is also projected to increase the fiscal deficit in 2020 to between 7.5 and 8.8 percent of GDP, from 5.1 percent of GDP in 2019. Consequently, debt levels are expected to increase to between 65 and 68 percent of GDP in 2020, from 59 percent of GDP in 2019. Reserve buffers are expected to fall in 2020 and cover less than one month of imports.

During these challenging times, it is important to alleviate the impact of the economic downturn on households and firms” said Mariam Sherman, World Bank Country Director for Myanmar, Cambodia and Lao PDR. “Looking forward, reducing the heavy burden of external debt and undertaking macroeconomic reforms will help Lao PDR build a more resilient economy to cope with shocks.”  

The COVID-19 shock will also have a significant impact on the labor market and poverty. A sharp drop in the performance of the travel, tourism and hospitality sectors – which account for 11 percent of total employment and 22 percent of employment in urban areas – has caused widespread job losses. Between 96,000 and 214,000 additional people are estimated to fall into poverty as a result of the pandemic, jeopardizing past gains.

The report also includes a thematic section on Building Resilient Health Systems. Evidence shows that Lao PDR needs to invest more in building a resilient health system to effectively respond to heath emergencies. At the same time, it is important to ensure that adequate resources continue to be available to provide quality essential health services to all citizens.

The Lao Economic Monitor is published twice yearly by the World Bank Office in Lao PDR.

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Strengthen Inclusion and Empower the World’s Invisible Billion

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The World Bank announced today the launch of the second Mission Billion Challenge for innovative solutions to increase inclusion and access to digital platforms such as identification systems. This challenge will crowdsource innovations at a time when countries seek to deliver cash relief to vulnerable persons, such as informal workers affected by the COVID-19 pandemic. The Challenge offers cash prizes totaling US$150,000 for the most promising solutions.

“The challenges countries are facing to mitigate the economic impact of COVID-19 underscore the urgency for action. Innovation that takes into consideration gender equality and different levels of access to technology among vulnerable groups is critical,” said World Bank Vice President for Infrastructure Makhtar Diop, “The Mission Billion Challenge is a platform for sourcing solutions that address disparities by helping to ensure identification systems are inclusive of all people.”

The Mission Billion Challenge comes at a time of an unprecedented global crisis. The pandemic highlights the importance of platforms (such as foundational IDs, government to person (G2P) payments, and social registries) to quickly scale up or to introduce new social protection programs. In particular, countries with such assets have been able to efficiently make cash transfers to informal workers, migrant workers, and other vulnerable populations who are difficult to identify and not commonly included in social safety nets. The Challenge seeks more solutions to how countries can increase their efforts to reach women and girls, and vulnerable populations—who often lack smartphones, computers and broadband internet access—to prove who they are, remotely with no or minimal in-person interaction, so they can access services and benefits with minimal risks to health.

 “Inclusion must be at the heart of all digital solutions. Vulnerable groups—such as the poor, people living in remote areas, women and girls, migrants and refugees—are more likely to face barriers to accessing and using their IDs. They must have equal access to services, support, and new economic opportunities which having an ID helps create,” said World Bank Vice President of Equitable Growth, Finance, and Institutions Ceyla Pazarbasioglu. 

The 2020 Mission Billion Challenge offers a Global Prize for solutions with world-wide application to ensure the inclusivity of ID systems for vulnerable groups, particularly during physical distancing requirements. This year, a new Regional West Africa Prize, will seek innovative solutions that facilitate contributions to social insurance programs, such as pensions and savings accounts, by informal sector workers.

Individuals and organizations with a strong passion for developing innovative solutions are encouraged to apply. Submitted solutions to the Challenge will be reviewed by a group of experts in digital identification, inclusion, and international development. Finalists will be invited to a high-level event to present their solutions in front of distinguished judges around the World Bank Group’s Annual Meetings in October 2020.

The Mission Billion Challenge is open. The submission deadline is August 14, 2020. To learn more about the Challenge, visit: http://id4d.worldbank.org/missionbillion.

About the Identification for Development (ID4D) Initiative

The World Bank Group’s Identification for Development (ID4D) Initiative helps countries realize the transformational potential of digital identification. ID4D is a cross sectoral initiative that works closely with countries and partners to enable all people to exercise their rights and to access services, including to provide official identification to the estimated 1 billion people currently without one. ID4D has three pillars of activity: country and regional engagement; thought leadership; and global convening and platforms. The ID4D agenda supports the achievement of the World Bank Group’s two overarching goals: ending extreme poverty by 2030 and promoting shared prosperity. ID4D is supported by the Bill & Melinda Gates Foundation, the UK Government, the French Government, the Australian Government, and Omidyar Network.

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Enabling Europe to lead the green and digital transition

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The Commission released today its latest report on the EU’s Science, Research and Innovation Performance, through which it analyses how Europe performs in the global context. It highlights the need for research and innovation (R&I) to support sustainable and inclusive growth of companies, regions and countries, making sure that no one is left behind in the quest for strengthening innovation systems, especially in less-developed regions. It also emphasises the importance of ensuring that Europeans have the right skills, in the light of new technological revolutions, as well as the significant role of R&I policy in reinforcing companies’ productivity, resulting in jobs and value creation, in a sustainable way. In particular, the 2020 edition of the biennial report presents 11 policy recommendations to support our people, planet and prosperity.

Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth said: “Research and innovation is at the core of the response to the unprecedented crisis we are facing and can significantly contribute to the economic recovery. The 2020 Science, Research and Innovation Performance report shows how research and innovation are central to bring about the ecological and digital transitions Europe needs. Horizon 2020 and the future Horizon Europe programme play a crucial role in this transformation.”

The EU ranks among the top players in scientific production and excellence, for example accounting worldwide for 25% of top-cited scientific publications on the topic of climate and for 27% in the area of bioeconomy. When it comes to patent applications in these two areas, the EU is also leading the way with 24% in climate and 25% in bioeconomy. Yet, more efforts are needed to turn research results into sustainable marketable solutions as well as to build a strong European Research Area and increase the effectiveness of public research systems.And, as digitalisation is transforming R&I,the right policy mix should foster deep-tech and researchers’ digital skills, alongside promoting open science and ensuring sufficient investments in high-quality data infrastructures. Horizon Europe, the EU’s next research and innovation framework programme, will be a key part in stepping up and steering R&I efforts, through its mission-oriented approach and European partnerships.

Building on the EU’s excellence and top performance in science-based research and innovation, the Science, Research and Innovation Performance report presents 11 policy recommendations, grouped around three main pillars:

  • R&I for a safe and just space for humanity;
  • R&I for global leadership;
  • R&I for economic and societal impact.  

Together, they pave the way towards R&I delivering on the Sustainable Development Goals and mainstreaming them into EU policies and initiatives that will contribute to a fair, climate-neutral and digital Europe, while at the same time boosting the competitiveness of European businesses and regions.

Background

The Science, Research and Innovation performance of the EU report analyses research and innovation dynamics as well as Europe’s performance on science and innovation and their drivers. The Report combines indicator-based macroeconomic analysis with in-depth analytical research to create a narrative that speaks to an audience of both research and innovation as well as economics and finance policymakers and analysts. This is the third edition of the biennial publication by the European Commission’s Directorate-General for Research and Innovation.

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World Bank: Belarus’ Economy Can Face a Severe Shock

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As a small, open, commodity-exporting economy, Belarus is heavily exposed to shocks caused by deep contractions in its main trading partners, the collapse of oil prices, and global financial volatility related to the COVID-19 pandemic, says the World Bank’s latest Economic Update for Belarus, released today. Belarus’ economy is anticipated to contract by at least 4 percent in 2020 – the largest decline in 25 years – and growth is expected to remain weak in the medium-term.

“The impacts of COVID-19 will be severe for Belarus,” said Alex Kremer, World Bank Country Manager for Belarus. “A faster return to normal, however, could be achieved by enabling social distancing to slow the spread of the virus and cash transfers to assist vulnerable households. In addition, policy measures to boost competitiveness and productivity will allow Belarus to take advantage of global trends expected to accelerate after COVID-19. These include the growth of digital services, as well as more opportunities for goods and services, as producers seek to diversify supply chains and relocate manufacturing closer to home.”

A Special Topic Note that is part of the Update reviews the experiences of other countries in responding to the pandemic and formulates potential policy measures for Belarus.

“To help mitigate the social and economic impacts of the pandemic, it is critical to strengthen support to the poor and most vulnerable,” said Kiryl Haiduk, World Bank Country Economist for Belarus. “In Belarus, this could include increasing the coverage and generosity of means-tested benefits, such as the cash component of the targeted social assistance program (GASP), and increasing unemployment support.”

Since the Republic of Belarus joined the World Bank in 1992, lending commitments to the country have totaled $2.1 billion. In addition, the country has received grants of $31 million. The active investment lending portfolio financed by the World Bank in Belarus includes ten projects totaling $1.05 billion.

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