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Pandemic recovery: Germany should invest more in digital economy and energy transition

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Germany should increase public infrastructure investment and accelerate its digital transformation and energy transition to strengthen and sustain its recovery from the economic crisis sparked by COVID-19, according to a new OECD report.

The latest OECD Economic Survey of Germany credits the government’s swift and effective crisis response and a strong healthcare system for enabling a less severe social and economic impact from the pandemic than in many neighbouring countries. The 1.4 percentage point rise in the unemployment rate in the first half of the year was small by international standards, thanks to the extensive use of the government-subsidised short-time work scheme. Yet the crisis has still pushed the economy into a deep recession after a decade of expansion, with economic output projected to shrink by 5.5% in 2020 and recover only gradually with GDP growth at 2.8% in 2021 and 3.3% in 2022. It is important that measures to support the health system and the hardest hit sections of society and the economy are not scaled back too fast.

“Germany has suffered a severe economic shock from COVID-19, despite the government’s swift and substantial response. Germany should use the recovery as an opportunity to invest in its digital transformation, accelerate its transition to a low-carbon economy, and increase labour market inclusion,” said OECD Secretary-General Angel Gurría.

While the government’s June stimulus package took encouraging steps towards advancing the digital and energy transitions, more infrastructure investment is needed to spur a sustainable and inclusive recovery and ensure that Germany can reap the productivity benefits of digital technologies and the environmental benefits of greener energy and transport, the Survey says.

Despite being a world leader in technology and engineering, Germany lags other advanced economies on the digital transformation at a time when the pandemic has heightened the need for good quality and reliable digital connectivity. Average mobile data usage and connection speeds are low, and uneven availability of high-speed Internet has created an urban-rural digital divide. Many small and medium-sized enterprises (SMEs) lag behind in the use of digital technologies, such as cloud computing, that are key for innovation and productivity. Only a small percentage of young people have programming skills, with the share even lower among girls and women. 

Improving competition among Internet providers and simplifying administrative processes for network deployment would help to improve digital connectivity. SMEs should be given better access to financial support, including Research and Development tax incentives, to help them adopt advanced technologies. More should also be done to promote digital skills across the population and to make computational thinking part of the school curriculum from an early age.

Germany has made significant progress on climate policy, particularly in the past year, with the introduction of an emissions pricing system in the transport and heating sectors, increased promotion of electric vehicles and charging stations, and higher targets for renewable electricity generation. However, per capita greenhouse gas emissions in Germany are still high by European standards. If Germany is to meet its Paris Agreement target of reducing its greenhouse gas emissions by 55 percent by 2030 relative to 1990 levels, greater efforts will be needed. The Survey recommends reducing coal-fired power generation earlier than planned, expanding energy-efficient building renovation, linking the pricing of fuels, vehicles and road use more clearly to environmental damage, and creating alternative, climate-friendly transport options.

Although public investment has increased since 2014, two decades of weak investment have left a backlog, particularly in the areas of low-emission transport solutions, digital transformation, health, social housing, early childhood education and power grids. In view of the negative net investment in many financially weak municipalities, the Survey recommends the federal government further support investment by municipalities.

The Survey also recommends expanding local planning capacity and improving co-operation across government agencies to speed up the implementation and effectiveness of infrastructure projects. It would be sensible, for example, to use independent infrastructure planning advice that facilitates alignment between different levels of government and sectors and gives construction firms more security in their planning.

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Aviation Sector Calls for Unified Cybersecurity Practices to Mitigate Growing Risks

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airplane travel

The aviation industry needs to unify its approach to prevent cybersecurity shocks, according to a new study released today by the World Economic Forum. The increased level of interdependencies can lead to systemic risks and cascading effects as airlines, airports and aircraft manufacturing take different approaches to countering cyber risks.

To guard against these risks and create a streamlined approach with civil aviation authorities, the World Economic Forum has launched the Cyber Resilience in Aviation initiative in collaboration with more than 50 companies.

The latest report, Pathways to a Cyber Resilient Aviation Industry, developed in collaboration with Deloitte, outlines how the industry – from airlines to airports to manufacturing and the supply chain – can work with a common language and baseline of practices. The report focuses on mitigating the impact of future digital threats on multiple levels:

International:

· Aligning regulations globally

· Establishing a baseline of cyber resilience across the supply and value chain

· Designing an impartial assessment and benchmarking framework

· Developing international information-sharing standards

National:

· Enabling reskilling

· Rewarding more open communication on aviation incidents

Organizational:

· Integrating cyber resilience in business resilience practices

· Ensuring risk assessment and prioritization

· Improving collaboration

“The aviation industry has developed a strong track record of safety, resilience and security practices for physical threats and must integrate cyber risks into this culture of safety and resilience,” said Georges De Moura, Head of Industry Solutions, Centre for Cybersecurity, World Economic Forum. “A common understanding and approach to existing and emerging threats will enable industry and government actors to embrace a risk-informed cybersecurity approach to ensure a secure and resilient aviation ecosystem.”

“The work of the World Economic Forum on aviation cyber resilience complements these global efforts led by the ICAO and is another excellent example of the importance of broad-based international collaboration among public and private stakeholders,” said Fang Liu, Secretary-General, International Civil Aviation Organization (ICAO).

“Adopting a collaborative cyber-resilience stance and creating trust between cross-sector organizations, national and supranational authorities is the logical yet challenging next step,” said Chris Verdonck, Partner, Deloitte, Belgium. “However, if the effort is not collective, cyber risks will persist for all. Further solidifying an extensive and inclusive community and developing and implementing a security baseline is key to adapt to the current digital reality.”

The Cyber Resilience in Aviation initiative has enabled organizations to create plans as a community to safeguard against current and future risks. It convenes over 80 experts from more than 50 organizations across global aviation and technology companies, international organizations, trade associations and national government agencies. Major collaborators include ICAO, NCSC, EASA, IATA, ACI, Eurocontrol and UK CAA.

The recommendations and principles developed by the community have been published in a set of reports, allowing companies worldwide to learn from their insights and develop their own policies to ensure cybersecurity in aviation.

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Wide Variations in Post-COVID ‘Return to Normal’ Expectations

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London, UK, Covid-19 restrictions in place in Soho. IMF/Jeff Moore

A new IPSOS/World Economic Forum survey found that almost 60% expect a return to pre-COVID normal within the next 12 months. including 6% who think this is already the case, 9% who think it will take no more than three months, 13% four to six months, and 32% seven to 12 months (the median time). About one in five think it will take more than three years (10%) or that it will never happen (8%).

Views on when to expect a return to normal vary widely across countries: Over 70% of adults in Saudi Arabia, Russia, India, and mainland China are confident their life will return to pre-COVID normal within a year. In contrast, 80% in Japan and more than half in France, Italy, South Korea, and Spain expect it will take longer.

At a global level, expectations about how long it will take before one’s life can return to its pre-COVID normal and how long it will take for the pandemic to be contained are nearly identical. These findings suggest that people across the world consider that being able to return to “normal” life is entirely dependent on containing the pandemic.

An average of 45% of adults globally say their mental and emotional health has gotten worse since the beginning of the pandemic about a year ago. However, one in four say their mental health has improved since the beginning of the year (23%), about as many that say it has worsened (27%).

How long before coronavirus pandemic is contained?

Similar to life returning to pre-COVID normal, 58% on average across all countries and markets surveyed expect the pandemic to be contained within the next year, including 13% who think this is already the case or will happen within 3 months, 13% between four and six months and 32% between seven and 12 months (the median time in most markets).

Majorities in India, China, and Saudi Arabia think the pandemic is already contained or will be within the next 6 months. In contrast, four in five in Japan and more than half in Australia, France, Poland, Spain, and Sweden expect it will take more than a year.

Change in emotional and mental health since beginning of the pandemic about a year ago

On average across the 30 countries and markets surveyed, 45% of adults say their emotional and mental health has gotten worse since the beginning of the pandemic about a year ago, three times the proportion of adults who say it has improved (16%)

In 11 countries, at least half report a decline in their emotional and mental health with Turkey (61%), Chile (56%), and Hungary (56%) showing the largest proportions.

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African fisheries need reforms to boost resilience after Covid-19

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The African fisheries sector could benefit substantially from proper infrastructure and support services, which are generally lacking. The sector currently grapples with fragile value chains and marketing, weak management institutions and serious issues relating to the governance of fisheries resources.

These were the findings of a study that the African Natural Resources Centre conducted from March to May 2020. The centre is a non-lending department of the African Development Bank. The study focused on the impact of the Covid-19 pandemic in four countries – Morocco, Mauritania, Senegal and Seychelles. The countries’ economies depend heavily on marine fisheries. The fisheries sector is also a very large source of economic activity elsewhere in Africa. It provides millions of jobs all over the continent.

The study dwells on appropriate and timely measures that the four countries have taken to avoid severe supply disruptions, save thousands of jobs and maintain governance transparency amid the ongoing global uncertainty and crisis.

Infrastructure shortcomings include landing facilities, storage and processing capacity, social and sanitary equipment, water and power, ice production, and roads to access markets.

Based on the findings, researchers made recommendations to strengthen the resilience of Africa’s fisheries sector in the context of a prolonged crisis, and looking ahead to a post-Covid-19 recovery.

The report strongly advocates for:

– Increased acknowledgment of the essential role of marine fisheries stakeholders and the right of artisanal fishermen to access financial and material resources.

– Strengthening the collection of gender-disaggregated statistical data in a sector that employs a vast number of women and youth.

– Establishing infrastructure and support services at landing and processing sites of fishery products, with priority access to water.

– Investing in human capital to ensure high-level skills in the different areas of fisheries management.

– Improving governance frameworks by encouraging the private sector and civil society to participate in formulating sectoral policies and resource management measures.

The study recommends urgent reforms to make marine fisheries more resilient and enable the sector to contribute sustainably to the wealth of the continent’s coastal countries.

Marine fisheries are a crucial contributor to food security and quality of life in Africa. Good nutrition is a key factor to quality of life, and the marine fisheries sector supports the nutrition of more than 300 million people, the majority of whom are children, youth and women. It also provides more than 10 million direct and indirect jobs.

Dominated by artisanal fishing and traditional value chains, the fisheries sector in Africa is mainly informal and is rarely considered in public policies or in assessing the wealth of countries.

Like other sectors, the African fisheries sector has been severely hit by the Covid-19 pandemic. Covid has affected supply markets and regional trade. This has resulted in substantial economic losses for most households that depend on fisheries.

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