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Slovenia: Keep supporting the economy until growth is fully restored

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After five years of robust growth that lifted employment, wages and well-being, Slovenia’s economy has been hit hard by the Covid-19 crisis. Further support to businesses and households may be needed to reinforce the recovery and avoid lasting scars, particularly given the underlying pressures of an ageing population, according to a new OECD report.

The latest OECD Economic Survey of Slovenia coincides with the country’s 10th anniversary of becoming an OECD member, a decade that has seen Slovenia carry out labour and pension reforms and further integrate into global value chains. Slovenia has also defied the rise in income inequality seen in many other OECD countries. Slovenia now needs to support the recovery from the coronavirus crisis until it is self-sustaining, including providing training and job search support to low-skilled workers, then return its focus to raising productivity, strengthening public finances and adapting the labour market and social system for a smaller and older workforce.

“Slovenia has made remarkable economic and social progress since joining the OECD, and the government has acted admirably to manage the health and economic fallout of the Covid-19 pandemic,” said OECD Secretary-General Angel Gurría. “It is vital now to stay on track, to stand ready to provide further support where needed to restore growth and then continue with measures to tackle the long-term economic challenges of an ageing population.”

Slovenia acted quickly to halt the spread of Covid-19 and its healthcare system managed the outbreak well. Financial measures to support jobs, income and businesses softened the shock to the economy. As these measures are withdrawn, the economy may need a fiscal stimulus in the form of some rapid and easy-to-implement temporary measures, the Survey says. The main risks to the economy now are a spike in bankruptcies and a further rise in unemployment.

Assuming no significant second wave of Covid-19 infections later this year, the Survey projects Slovenia’s GDP to grow by  4.5% in 2021 after declining by 7.8% in 2020. However, in the event of a second wave, GDP is projected to grow only 1.5% in 2021 after a contraction of 9.1% in 2020.

Once the recovery is well on track, stimulus can be wound down and the focus revert to tackling the challenges arising from population ageing, which by 2055 will have doubled the ratio of over-65s to working-age people to 60%, creating the double challenge of addressing ageing-related spending pressures as the revenue base contracts. If these pressures are not contained or offset, the sustainability of public finances will be at risk, the Survey says.

Future growth will depend on employing workers in the most efficient way possible, for example by keeping older, experienced workers in jobs for longer, doing more to help low-skilled workers and improving labour allocation so workers can achieve their full productivity and wage potential. To ease the pressure from a projected tripling in the public pension deficit, the Survey recommends raising the retirement age to 67 and, if needed, linking future rises to life expectancy.

The Survey recommends further reforms to lower barriers to competition and foreign investment, to strengthen governance of state-owned enterprises and to make the tax mix more growth-friendly and inclusive by shifting the burden from labour to property taxes.

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Africa Today

Investing in Key Sectors to Help Nigeriens Recover From the Health and Security Crises

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The Covid-19 pandemic crisis and the security situation continue to undermine the Nigerien economy, wiping out years of hard-won gains in poverty reduction.  A number of fiscal policy options are, however, available to help the country enhance public expenditure efficiency and increase its GDP by up to 2%. These are the findings of the World Bank’s latest economic and poverty update for Niger published today.

The report titled “Maximizing Public Expenditure Efficiency for Rebuilding Better” analyzes the impact of the health and security crises on Niger’s economy. The economy grew by 5.9% in 2019, but slowed to 3.6% in 2020, as a result of the combined impact of these crises. This sharp downturn increased poverty levels and pushed an additional 400,000 people into extreme poverty.

Nigeriens have been hard hit by the volatile security situation and these long months in the pandemic, with hundreds of thousands of children being kept out of school and deprived of proper health care, which will adversely affect their future,” notes Joelle Dehasse, World Bank Country Manager for Niger. “Turning this situation around will require massive and effective investments in human capital over the next few years.”

The report notes that these investments must be accompanied by bold structural and sectoral reforms aimed, among other things, at mobilizing more domestic resources, modernizing the administration, including the civil service, and promoting sound, prudent, and transparent government spending.

The projections for 2021 are nevertheless positive and economic growth is expected to rebound to 5.5%, driven by the reopening of the border with Nigeria, the resumption of large investment projects, and the normalization of several supply chains. However, these projections remain subject to the duration of the pandemic and the availability of vaccines, as well as to climate hazards and their impact on agricultural production and livelihoods.

The government of Niger has made tremendous progress in recent years in managing its public finances, giving high priority to social spending,” says Paolo Di Lorenzo, World Bank Senior Economist and co-author of the report. “However, public expenditure pressures remain high, partly due to the deteriorating security situation. Against this backdrop, the authorities should take further steps to improve domestic resource mobilization and public spending efficiency.”

The report’s authors recommend reprioritization across a number of key sectors in order to ensure Niger’s strong economic rebound.  These recommendations aim to redirect government revenues to basic social services and essential public infrastructure in order to maximize growth opportunities and social welfare. “Implementing the recommendations in the education sector will help improve spending and reallocate resources within the sector,” says Blaise Ehowe Nguem, Country Economist for Niger. “This will improve the quality of education, thereby reducing repetition and dropout rates.

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Ensuring a More Inclusive Future for Indonesia through Digital Technologies

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While Indonesia has one of the fastest growing digital economies in South East Asia, action is needed to ensure that all Indonesians, especially the most vulnerable, can access various digital technologies and services and realize the benefits, according to a new World Bank report Beyond Unicorns: Harnessing Digital Technologies for Inclusion in Indonesia.

Although the accelerated adoption of internet-enabled services during the pandemic is likely to boost the growth of the digital economy, the benefits of such development could be unequal.

“There are a whole host of opportunities to use digital technologies for promoting better healthcare delivery, and improving access among the underserved but these need to be built on a base of reliable and interoperable data systems,” said Minister of Health of the Republic of Indonesia, Budi Gunadi Sadikin. “The pandemic has generated an unprecedented urgency to make this a reality and has also created a momentum to expedite adoption of digital technologies.

For Indonesia to leverage digital technologies for greater inclusion, the new report emphasizes three policy priorities. The first is to boost digital connectivity and universalize access to high quality internet through efforts such as improving clarity of regulations around the sharing of telecom infrastructure. The second priority is to ensure that the digital economy works for all. This can be supported by better logistics and greater investment in relevant skills for the digital era. The third priority is using digital technologies to provide better public services, improve the quality of citizen-and-state interactions, and build trust in the digital world.

Despite the progress in expanding internet over the past decade, the basic connectivity gap remains a major hurdle in Indonesia. Almost half of the adult population is still without access while the urban-rural connectivity divide has not narrowed. In 2019, 62 percent of Indonesian adults in urban areas were connected to the internet compared to 36 percent in rural areas, while it was 20 percent and 6 percent respectively in 2011. Indonesians in the top 10 percent of the income distribution were five times more likely to be connected than those in the bottom 10 percent.

“Addressing the digital divide goes beyond efforts to reduce the connectivity gap,” said Satu Kahkonen, World Bank Country Director for Indonesia and Timor-Leste.“It will be crucial to help citizens develop the skills to maximize digital opportunities, especially for better jobs. At the same time, it is equally important for the government to address the challenges related to regulations and business environment to enable firms to innovate and compete effectively.”

The proportion of Indonesian adults with access to the internet has increased from 13 percent in 2011 to 51 percent in 2019. Indonesians who are connected to the internet are among the most engaged populations in the world spending as many as six hours a day online. In addition, a large segment of this population is ready to intensify their digital interactions with the government. However, fragmentation of data and an untapped potential of building a comprehensive digital ID framework off the existing ID system are some of the key challenges holding back the government from a broader digital transformation.

Digitally engaged Indonesians are now experiencing how technologies reshape their lives and commercial activities contributing to better consumer experience. However, the opportunities are often limited to a particular demographic group with relatively higher level of skills. Digital gig work is more remunerative than other forms of informal work but is concentrated among urban male workers predominantly in the transportation, storage, and communications sector.

The report recommends the development of a national digital ID framework to enable Indonesians to prove their identity securely online, including a law on personal data protection that is backed by an independent oversight body. It calls for a reorientation from a narrow focus on e-government to a more comprehensive national digital transformation agenda.

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Moscow is in the Top7 Intelligent Communities in the world

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For the second time since 2017, Moscow made it to the final stage of the Intelligent Community Awards rating. It involves the cities that show best practices in the development of communications, experts training, the use of innovation, digital inclusion, the involvement of residents in city management, and the maintenance of sustainability principles. The prestigious international rating is issued annually by the Intelligent Community Forum.

The first stage, which took place in February this year, 21 cities from eight countries were selected. At the second stage, an international group of independent experts selected seven finalists. Alongside with to Moscow, there are cities from Canada, Australia, Vietnam and Brazil.

The experts noted the capital’s achievements in the development and use of communications, the residents’ involvement in the city government, the training of IT-specialists, enhancing digital literacy, as well as the support and implementation of innovations.

“To participate in the prestigious international rating, our team in cooperation with the specialists of the Moscow Innovation Agency prepared a detailed description of the most significant implemented digital projects in the field of communication development and use, resident participation in the city management, training IT-specialists, improving digital literacy, supporting and implementing innovations, as well as responsible consumption and protection of natural resources. Due to continuous development of the city’s digital technologies over the past four years, Moscow is among the Smart21 cities for the third time and for the second time is among top seven Smart Communities, which certainly shows that our work is highly appreciated by foreign specialists,” said Eduard Lysenko, the head of the Moscow Department of Information Technologies. 

The jury assessed not only how developed the urban infrastructure is, but also how effectively it is adapted to new economic challenges. In the field of broadband Internet access development, Moscow presented the project of the city Wi-Fi network. It includes more than 21 thousand points of access to free Internet, as well as 5G pilot zones launched jointly with telecom operators to estimate the use of fifth-generation communication technologies.

In the field of highly qualified personnel training in Moscow, the educational projects of the Moscow Government were noted. These projects are devoted to pre-vocational education, namely arranging industry specific training in Moscow schools, as well as to the voluntary qualification examination. It is organized jointly with the corporate partners to assess and select students according to employers’ requirements.

The project “My Career” by Moscow employment center was also presented among the important initiatives. Residents can get assistance in finding suitable vacancies, a professional career counselling, psychological support, as well as take part in employment-related trainings and webinars. The center focuses on the most vulnerable categories in the labor market: mothers of young children, youth, applicants of pre-retirement specialists, people with disabilities, low-income families.

The “Innovation” section presented “Moscow Accelerator” – the flagship project of the Moscow Department of Entrepreneurship and Innovation Development, aimed at scaling innovative solutions in promising industries in partnership with major corporations – market leaders. Another project in this area is the Moscow Innovation Cluster. It was created for the development of innovative organizations, projects and cooperation between the city and large companies, industry, small and medium-sized businesses, educational and scientific organizations. The online platform “i.moscow” provides opportunities for interaction between cluster participants.

“The Moscow innovation ecosystem” is also in the rating. The program allows the developers to test their technologies at urban and commercial sites before they are released on the market, and the authorities and potential customers can evaluate their effectiveness.

The project “Moscow Longevity” represents the field of inclusion development, creation of intellectual communities and improvement of people’s access to digital technologies. The project is aimed at creating a network of free leisure for the older generation of Muscovites and expanding the opportunities for their participation in cultural, educational, physical fitness, health and other activities was noted.

The Smart City hall offers a visual demonstration of new technologies for residents of all ages. This is a permanent exhibition of Smart City technologies located on the territory of VDNKh. You can visit the hall for free, and guided tours are offered several times a day.

In the hall there is a 5G democenter, which is part of the capital’s pilot innovation testing program. Several technological projects involving the fifth-generation communication networks are already being tested at this site. This is wireless optical communication in 5G standard, VR and AR in architecture and construction, virtual reality training via 5G, computer vision for drones and access control with remote temperature measurement.

The involvement of citizens in improving the quality of life is achieved through the digital ecosystem of interaction between the city and residents. The Active Citizen project allows every resident to take part in voting on topical issues of city development, the Our City portal allows you to report a problem in housing services and amenities, and the City of Ideas enables you to offer your ideas for crowdsourcing.

The city also presented social projects. Among them are the charity service on the mos.ru portal, which helps residents make donations to verified Moscow non-profit organizations and foundations, and the “Search for Lost and Found Animals” service which helps find a lost pet. A number of projects are aimed at environmental sustainability. Namely a set of services aimed at reducing water consumption in Moscow (a service for transmitting readings of water meters, an interactive test and the project “The Price of Water” based on AR-technology), as well as the portal “MosEcoMonitoring”. It allows residents to monitor the condition and quality of air in their city or district online in real time.

Intelligent Community Forum is a non-governmental organization headquartered in New York. ICF rating has been issued since 2005. The current leader of the Intelligent Community Awards is Tallinn. The new leader will be announced in autumn.

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