Connect with us

Finance

G20: Global co-operation and strong policy action needed for a sustainable recovery

Published

on

The COVID-19 crisis has exposed major weaknesses in our economies that can only be fixed through greater global co-operation and strong, targeted policy action, according to a new OECD report presented to the Leaders of the G20 countries at their virtual Summit this weekend.

New Horizons, a report requested by the G20 to support its Action Plan in response to the crisis, says governments need to plan now for the recovery while continuing to live with the virus. Emergency economic measures to tackle the crisis will need to be adapted, support to people and businesses become more targeted, and new policies put in place to make the objective of a stronger, sustainable and inclusive global economy, a reality.

Speaking at the Summit OECD Secretary-General Angel Gurría said that ambitious reforms were needed to ensure a vigorous recovery. He added: “We need to make sure health and social protection benefit all, that public and private investment is aligned with the Sustainable Development Goals, and we need to build resilience into the heart of our economic and social systems.”

The OECD identifies the need for stronger co-operation between governments in a number of fields:

  • in health, from research to distributing COVID-19 vaccines,
  • in trade, to ensure robust global production chains,
  • in the taxation of multinationals as the economy becomes increasingly digitalised,
  • in environmental sustainability, and,
  • in preventing sudden outflows of capital and sovereign debt crises in emerging markets and developing countries.

The report says exceptional fiscal spending and monetary support should be maintained as long as needed to buffer the shock of the pandemic, and outlines how governments should work on three main fronts – to reallocate resources; support people; and build a sustainable and resilient economic system for the future.

The crisis is accelerating changes to the economy, which are often disruptive. Governments will need to assist workers and businesses to transition from shrinking to expanding sectors; by removing barriers to mobility, by increasing competition, and by making it easier for firms to access finance and advanced technologies or to restructure.

Improving training and building skills, particularly among the low-skilled, youths and women who are often vulnerable in the labour market, will be key. Job retention schemes will need to evolve to ensure that people, rather than their jobs, are protected, that their opportunities are widened and their income safeguarded.

Increasing public and private investment particularly in healthcare, digitalisation, lowering carbon emissions, education and skills are essential to reinforce sustainability and resilience.

The New Horizons report is part of the broad range of analysis and recommendations from the OECD and other international organisations to support the work of the G20.

Mr. Gurría welcomed the achievements of the G20 under the Saudi presidency. In particular, he pointed to the G20 reaffirming its targets to reduce the percentage of young people who are most at risk of being left behind in the labour market by 15% by 2025, and to reduce the gender gap in the labour force by 25 % over the next five years. The OECD and ILO will continue monitoring progress in these areas, as well as on the impact of the pandemic on employment and trends in migration.

Mr Gurría said the OECD is continuing to work with the G20 towards achieving a political agreement on how to tax the digital economy by mid-2021. In the Secretary-General’s Tax Report to G20 finance ministers, the OECD warns that without an agreement there would be a proliferation of unilateral measures and an increase in damaging tax and trade disputes that could cut global GDP at a time when we are reeling from the pandemic.

He added that a sustainable economic recovery from the crisis would be undermined by environmentally harmful spending – such as fossil fuel subsidies – which still outweighs more ecologically friendly investments in the recovery packages announced by governments.

Mr Gurría also welcomed G20 progress on fighting corruption and criminalising foreign bribery, including the request by Saudi Arabia to join the OECD Working Group on Bribery, with a view to adhering to the OECD Anti-bribery Convention, the international standard in this area.

Continue Reading
Comments

Finance

Albania Has Opportunity to Build a More Sustainable Growth Model

Published

on

Albania’s economy, like other countries in the region, is recovering faster than expected after the historic recession created by the COVID-19 pandemic. Following the contraction of the economy by 4 percent in 2020, GDP growth is projected to reach 7.2 percent in 2021, one of the highest among Western Balkans countries, says the latest edition of the Western Balkans Regular Economic Report, Greening the Recovery.

The strong recovery is supported by consumption, tourism, and construction. Going forward, growth is expected to moderate at 3.8 percent in 2022 and 3.7 percent in 2023.

Albania’s poverty rate is projected to fall below its pre-pandemic level by end-2021. Employment and labor force participation is also recovering, albeit with a lag, and real wages are increasing.

The recovery is contributing to fiscal revenue collection. Macroeconomic policies have supported the recovery, but higher spending has led to a further rise in the debt-to-GDP ratio. Economic uncertainty remains high, as the COVID-19 pandemic continues worldwide.

“The Albanian economy has shown encouraging signs of recovery in 2021,” said Emanuel Salinas, World Bank Country Manager for Albania. “As growth rebounds, Albania has the opportunity to strengthen the sustainability of its economic model and implement reforms that further support sustainable and shared growth, while preserving macroeconomic stability.”

The report shows that the Western Balkans region has improved significantly, with GDP growth now projected to reach 5.9 percent in 2021, after a 3.1 percent contraction in 2020. Growth in the region is projected at 4.1 percent in 2022 and 3.8 percent in 2023.

The poverty rate for the region is projected to resume its pre-pandemic downward trend and fall by around 1 percentage point to 20.3 percent, close to its 2019 level.

The regionwide recovery is due to strength in both domestic and external demand. A sharp rebound in domestic consumption and in travel across Europe helped boost remittances as well as tourism inflows during the 2021 peak summer season. A strong recovery in advanced economies also provided a boost to demand for the region’s exports.

However, the recovery remains fragile. Early warning signals from the labor market call for close policy attention. Job losses from the recession and its aftermath have disproportionately affected women and youth, which may set back efforts to raise the region’s perennially low rates of labor force participation. Youth unemployment in the region rose to 37.7 percent in 2021, up 5.4 percentage points from June 2020, further worsening youth employment prospects.

“As the Western Balkans countries look to a post-pandemic future, their policy approach will need to focus on addressing key impediments to job creation and economic transformation, including green transition,” said Linda Van Gelder, World Bank Country Director for the Western Balkans. “All six countries would benefit from reforms in the business environment, governance, and digitalization, which would contribute to growth and close the gap with EU countries.”

The report also looks at the macro-fiscal challenges and drivers of greening the region’s growth. The Western Balkans now find themselves at a key decision point regarding the impending green transition.

Global strides toward climate action are causing fundamental changes in society. Consumer and investor preferences are shifting, green technologies and new business models are disrupting more markets, and green policies are reshaping economic landscapes. As such, greening a country’s economy is becoming a decisive factor in international competitiveness and the ability to attract international finance and investments.

The Western Balkans are no exception. Still characterized by a development model tilted toward familiar brown industries, moving toward a green growth pathway is far from easy, especially in the short term. Yet, the green transition offers significant opportunities for the Western Balkans – including closer integration into Euro-centric global value chains and access to significant EU resources to help fund a green transition.

Effectively managing this green transition, including the many policy tradeoffs, will need to be a core focus of policy attention for the Western Balkans in the years ahead.

Continue Reading

Finance

Montenegro on Course for Stronger Economic Recovery in 2021

Published

on

The Western Balkans region is rebounding from the COVID-19-induced recession of 2020, thanks to a faster-than-expected recovery in 2021, says the latest edition of the Western Balkans Regular Economic Report, Greening the Recovery.

The outlook for the region has improved significantly, with GDP growth now projected to reach 5.9 percent in 2021, after a 3.1 percent contraction in 2020. Growth in the region is projected at 4.1 percent in 2022 and 3.8 percent in 2023.

Driven by a rapid recovery in tourism, Montenegro’s economy is projected to rebound strongly by an estimated 10.8 percent in 2021, the highest rate among the six Western Balkan countries. Strong peak summer season has supported a rebound in tourism revenues, which are likely to reach close to 75 percent of their 2019 levels, from 55 percent previously estimated.

The rebound of economic activity has boosted government revenues, which coupled with careful fiscal management have led to a reduction in fiscal deficit from 11 percent of GDP in 2020 to an estimated 4 percent in 2021. Maintaining fiscal prudence in the medium term will be critical, as uncertainties loom.

“The economic crisis brought on by the COVID-19 pandemic continues to be a source of uncertainty, but also presents an opportunity for Montenegro to ensure a resilient, inclusive, and green post-pandemic recovery,” says Christopher Sheldon, World Bank Country Manager for Bosnia and Herzegovina and Montenegro. “The World Bank is committed to helping Montenegro implement reforms that can help ensure macroeconomic stability, create economic opportunities, and spur strong private-sector led growth”.

The report finds that unemployment in Montenegro remains high as the recovery has not ignited the labor market yet, which limits the pace of resumed poverty reduction. Poverty is projected to decline slowly in 2021, but it remains higher than its 2019 level.

The poverty rate for the region is projected to resume its pre-pandemic downward trend and fall by around 1 percentage point to 20.3 percent, close to its 2019 level.

The regionwide recovery is due to strength in both domestic and external demand. A sharp rebound in domestic consumption and in travel across Europe helped boost remittances as well as tourism inflows during the 2021 peak summer season. A strong recovery in advanced economies also provided a boost to demand for the region’s exports.

However, the recovery remains fragile. Early warning signals from the labor market call for close policy attention. Job losses from the recession and its aftermath have disproportionately affected women and youth, which may set back efforts to raise the region’s perennially low rates of labor force participation. Youth unemployment rose to 37.7 percent in 2021, up 5.4 percentage points from June 2020, further worsening youth employment prospects.

“As the Western Balkans countries look to a post-pandemic future, their policy approach will need to focus on addressing key impediments to job creation and economic transformation, including green transition,” said Linda Van Gelder, World Bank Country Director for the Western Balkans. “All six countries would benefit from reforms in the business environment, governance, and digitalization, which would contribute to growth and close the gap with EU countries.”

The report also looks at the macro-fiscal challenges and drivers of greening the region’s growth. The Western Balkans now find themselves at a key decision point regarding the impending green transition.

Global strides toward climate action are causing fundamental changes in society. Consumer and investor preferences are shifting, green technologies and new business models are disrupting more markets, and green policies are reshaping economic landscapes. As such, greening a country’s economy is becoming a decisive factor in international competitiveness and the ability to attract international finance and investments.

The Western Balkans are no exception. Still characterized by a development model tilted toward familiar brown industries, moving toward a green growth pathway is far from easy, especially in the short term. Yet, the green transition offers significant opportunities for the Western Balkans – including closer integration into Euro-centric global value chains and access to significant EU resources to help fund a green transition.

Effectively managing this green transition, including the many policy tradeoffs, will need to be a core focus of policy attention for the Western Balkans in the years ahead.

Continue Reading

Finance

North Macedonia’s Growth Projected Higher, but Economy Still Faces Risks

Published

on

macedonia

The Western Balkans region is rebounding from the COVID-19-induced recession of 2020, thanks to a faster-than-expected recovery in 2021, says the latest edition of the Western Balkans Regular Economic Report, Greening the Recovery.

The outlook for the region has improved significantly, with GDP growth now projected to reach 5.9 percent in 2021, after a 3.1 percent contraction in 2020. Growth in the region is projected at 4.1 percent in 2022 and 3.8 percent in 2023.

The poverty rate for the region is projected to resume its pre-pandemic downward trend and fall by around 1 percentage point to 20.3 percent, close to its 2019 level.

The regionwide recovery is due to strength in both domestic and external demand. A sharp rebound in domestic consumption and in travel across Europe helped boost remittances as well as tourism inflows during the 2021 peak summer season. A strong recovery in advanced economies also provided a boost to demand for the region’s exports.

For North Macedonia, this translates into a growth projection of 4.6 percent for 2021, much higher than the forecast in spring. “This positive outlook is still surrounded by downside risks, with the pace of immunization low and supply chains still disrupted, while financial conditions have started tightening,” said Massimiliano Paolucci, World Bank Country Manager for North Macedonia and Kosovo.

However, the recovery remains fragile. Early warning signals from the labor market call for close policy attention. Job losses from the recession and its aftermath have disproportionately affected women and youth, which may set back efforts to raise the region’s perennially low rates of labor force participation. Youth unemployment rose to 37.7 percent in 2021, up 5.4 percentage points from June 2020, further worsening youth employment prospects.

“As the Western Balkans countries look to a post-pandemic future, their policy approach will need to focus on addressing key impediments to job creation and economic transformation, including green transition,” said Linda Van Gelder, World Bank Regional Director for the Western Balkans. “All six countries would benefit from reforms in the business environment, governance, and digitalization, which would contribute to growth and close the gap with EU countries.”

The report also looks at the macro-fiscal challenges and drivers of greening the region’s growth. The Western Balkans now find themselves at a key decision point regarding the impending green transition.

Global strides toward climate action are causing fundamental changes in society. Consumer and investor preferences are shifting, green technologies and new business models are disrupting more markets, and green policies are reshaping economic landscapes. As such, greening a country’s economy is becoming a decisive factor in international competitiveness and the ability to attract international finance and investments.

The Western Balkans are no exception. Still characterized by a development model tilted toward familiar brown industries, moving toward a green growth pathway is far from easy, especially in the short term. Yet, the green transition offers significant opportunities for the Western Balkans – including closer integration into Euro-centric global value chains and access to significant EU resources to help fund a green transition.

Effectively managing this green transition, including the many policy tradeoffs, will need to be a core focus of policy attention for the Western Balkans in the years ahead.

Continue Reading

Publications

Latest

Defense3 hours ago

Will India be sanctioned over the S-400 Air Defense System?

The Russian S-400 air defense system has emerged as a serious concern for US policymakers. Amongst other states, US allies...

Finance5 hours ago

Albania Has Opportunity to Build a More Sustainable Growth Model

Albania’s economy, like other countries in the region, is recovering faster than expected after the historic recession created by the...

Middle East7 hours ago

Process to draft Syria constitution begins this week

The process of drafting a new constitution for Syria will begin this week, the UN Special Envoy for the country,...

Human Rights9 hours ago

Only ‘real equality’ can end vicious cycle of poverty

Although poverty and privilege “continue to reproduce themselves in vicious cycles”, it is possible to break the chain and shift the paradigm, an independent UN human rights...

Finance11 hours ago

Montenegro on Course for Stronger Economic Recovery in 2021

The Western Balkans region is rebounding from the COVID-19-induced recession of 2020, thanks to a faster-than-expected recovery in 2021, says...

Environment13 hours ago

UNESCO ‘eDNA’ initiative to ‘unlock’ knowledge for biodiversity protection

To understand the richness of biodiversity across World Heritage marine sites, the UN scientific organization launched on Monday a project to protect...

Americas15 hours ago

America’s Two-Tiered Justice System

The Constitution states only one command twice. The Fifth Amendment says to the federal government that no one shall be “deprived...

Trending