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Stagflation: Between Threat and Power and What to Understand

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Until now, global conditions are still in the phase of economic recovery from the effects of covid 19. Even in the country of origin of the outbreak, the country is still struggling against the outbreak.  Not finished with the epidemic, in early 2022 the world was again shocked by the Russian invasion of Ukraine, although at first the reason for the invasion was not a complex problem, but until now, the war that has been going on for four months has become a new focus problem in the world that has caused many problems.  dangerous risks in terms of human security, whether real or not.  The pandemic and the Russia-Ukraine war are just two of the big problems facing global governments today, we don’t count the minor border wars, the Jewish Israeli invasion of Palestine, new epidemics that have the potential to threaten human life, climate and energy issues.  Why the epidemic and the Russo-Ukrainian war are counted as big problems and challenges today is because the outbreak and the Russo-Ukrainian War threaten the flow of distribution of logistics goods as well as energy.  If this is studied further, it could be because the countries that are the main players at this time are countries that have great power.  The involvement of the big powers will become a magnet for other countries, the impact will also be felt by many countries and also the state actors involved.  The biggest impact globally today is that epidemics and wars have threatened global economic stability.  At least, there are about 10 countries in the world that have experienced inflation and are threatened with recession in the second quarter of 2022.

Understanding Recession, Crisis, Inflation, and Depression

 Several major countries in the world are currently experiencing high inflation rates, and are even experiencing a period of recession.  Before discussing inflation and stagflation further, it is necessary to recall some terms in the threat of the economic environment.  There are at least four terms that economists use to describe economic threats, namely:

 Recession

 A recession is a time when a country’s economic growth declines for two consecutive quarters.  Recession is usually marked by a decrease in people’s purchasing power and an increase in unemployment.  The difference between a recession and a crisis is that the impact of a recession is more evenly distributed across all sectors of the economy.  The things that cause a recession, for example, are economic shocks due to the pandemic, excessive debt, and inefficient investment.  In addition, uncontrolled deflation can also be the cause of a recession.  Deflation itself means that prices fall from time to time which causes wages to contract and continues to suppress prices.  This makes shopping activities stop.

 Crisis

 Crisis is a situation where several economic indicators drastically decrease in a country.  This is caused by fragile economic fundamentals, as can be seen from the stalled economic growth. Signs of an economic crisis are usually seen in the decline in government spending capacity, low purchasing power of the people, and rising prices of basic commodities.

 The difference between a recession and a crisis is its impact, namely a recession can be bigger and wider in a longer time span than a crisis.

Inflation

 Inflation is a condition where the price of goods and services increases continuously within a certain period of time.  Inflation is caused by an increase in the circulation of money in society, increased production costs and an imbalance between supply and demand.  The impact of inflation can make people’s purchasing power decrease.  If purchasing power decreases within a certain period of time, it will automatically cause economic growth to decline which can lead to a recession.  The existence of inflation can also potentially be the cause of a crisis, even a recession.

 Economic depression

 Meanwhile, what is most feared to happen if the recession does not end is the economic depression.  An economic depression can also be referred to as an extreme recession that lasts up to two years in a row.  That is, if there is an economic depression, it means that economic problems cannot be resolved.  This brings with it a worsening impact, such as higher unemployment rates and has a global impact.

 The inflationary tsunami swept across countries in the United States, Europe and other countries.  At least 60% of countries have an annual inflation rate above 5%.  In developing countries, inflation can be above 7%.  According to data from Trading Economics in April 2022, there were at least 10 countries with the highest inflation with Venezuela in the first place with high inflation reaching 222%, followed by Zimbabwe, which was 96.40% and then Turkey which almost reached 70% in April.  then.  Uncertain economic growth causes recessions and crises.  Global consensus is now for world economic growth to average just 3.3% this year, down from the 4.1% expected last January, before the war broke out.  Global inflation is forecast at 6.2%, or 2.25% higher than last January’s forecast.  The IMF lowered its forecast for this year’s 143 countries that account for 86% of global gross domestic product (GDP).

The Threat of Global Stagflation 2022

 The fact that many countries in the world must take into account today is higher inflation and slower economic growth.  Now the world is faced with a new condition of global economic threat, namely “Stagflation” which is already in sight.  Stagflation is the rate at which inflation exceeds expectations, while forecasts for growth are rapidly declining.  In another description, stagflation is described as a characteristic in which the price of goods continues to be high while income does not increase.  Stagflation reflects a time when no matter how hard you try to make money, the money you collect is not sufficient to meet the exchange rate for goods, meanwhile there is no economic value business that can be done because of the scarcity of materials, which will further lead to an increase in the number of unemployed.  Stagflation is also defined as a condition of unemployment accompanied by inflation.  Stagflation presents a difficult choice for policy makers, which is the right way, tactics, and timing.  Until now, the price of basic needs in the market has continued to increase, while the exchange rate is still weak, while jobs are increasingly difficult, salaries and wages have not increased, while basic needs continue to skyrocket.

Will Inflation and the Threat of Stagflation Shift Current Power?

 Economic strength is one part of the soft power of a country, although it cannot be denied that it is currently very difficult to avoid a real war (military).  Both types of power (soft and hard) are very transparent and easy to feel, even information spreads around the world so fast.  The situation where the dominance of these two powers at the same time characterizes the current pattern of global state order.  We see that for years America has held the top position for world power, after the end of World War 2 there was a polar shift of power to America, where America led and also controlled the global culture, education, economy, and even weapons, so there was no  other choice but to follow America or not have any place in this world.  However, now things are starting to change.  A weak US dollar and a strengthening Russian ruble reflect the characteristics of power in the current soft form.  As it turned out, the sanctions imposed on Russia did not make the country worse off, Russia’s economic policies that increased gas and oil prices and required purchases using the ruble forced the sanctioning countries to rethink imposing sanctions on Russia, because Russia is the largest energy exporting country.  Coal and natural gas are essential for the survival of life, especially in the deadly winter.  A long-running war between Russia and Ukraine will be able to put the world at the worst economic risk that has never been imagined.  Not only countries that are at war, the impact of the current shift is also being felt by other countries, like it or not, state actors must be smart in taking partisan decisions with all the risks they bear, it is very difficult to be neutral for developing countries, if they are pro-  one of them will accept the risk, but if he is neutral he will be accused of being a traitor by both parties.  However, withdrawing completely is impossible, because countries that are not involved in war need energy supplies from the warring countries, be it energy or food, so there is no such thing as an eternal enemy or an eternal friend, there is only eternal interests.  .  What needs to be done is not to become too dependent on other people, at the state level, it is time to reduce dependence on goods and energy from outside, create new breakthroughs, minimize exports.  At the individual level, what needs to be done is to reduce consumptive behavior and get used to simple patterns and lifestyles and reduce dependence on the government and certain parties.

Uswah Alaydrus (孙美琳) from Indonesia. She received a Master of Law in International Relations from the School of International and Public Affairs, Jilin University, China. She is member of Tsunami Disaster Mitigation Researcher Center (TDMRC) and independent analyst emphasis on Environmental In International Relations Issues. She is also founder of Uswah Home Education Centre for Kids.

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Economy

World Order Is Old Order: New World Order Is No Order

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The grand hallucinations: When there is any order, it always becomes visible as an orderly progression, when it is supposed to be a secret or an invisible order, then it is grand hallucinations for a cult of illusionists. Observe how the World Order is an old order, and notice how the new world order is no order. The random engagements in illusionary cultish acts of chaos sold as order. Fakery sold and resold as victory, illusions pushed as hallucinations of success. Courage is needed to see the big magical acts of grand hallucinations.

The feel of afternoon-high: Across the world, free economies are already bent, twisted or broken, while procedures, policies and laws, everything on sale for the right price. Mighty-money, delivered crisply stacked, shrink-wrapped as freshly printed solutions, to buy more chaos, spread misery and create the economic hallucinations and stage the smoke and mirrors, all without any totals, balances or columns. Sold to feel a real afternoon-high.

The interchange: When integrity gone, fakery dominates, when real value-creation gone value-manipulation regulates, when vision gone illusions thrives, when national economics gone hallucinations declared as great success and reality interchanges to fakery.  

The elasticity left: Needed across the free economies of the world, no further proof required, a total change, no further verification needed, as political power no longer economical power, no further help needed, as most nations in need of basic diaper change. Visible damage to skills and competency, inability to understand and articulate the real problems with grassroots solutions is now a big tragedy of our times. Nations already stretched via rubber band economy, some with elasticity left before going bust.

The truth: Which nation has the capacity to face the truth? Which nation can fix itself not just top reshuffle, but rather from top to bottom to the real core? Which nation can uplift its citizenry to stand up to global age skills and cope with global speed and competitiveness? Which nation is capable of understanding and has the right to mobilize its hidden national entrepreneurialism and provide a future for the next generation?

No electricity and missing bulbs: Is there any value left in the most cherished Machiavellian style political power without ever creating any economic power? Is there any remaining value in economic power play of today without entrepreneurial growth models? What good are economies when stuck in waste paper baskets still without digitization like a nation being without electricity? What real economic value is created when odd mindsets playing with economic development procedures like creating light but with no bulb?  

Welcome to cold facts and warm realties.

The branded nations: Why each and every single nation of our planet is now branded every single day of the year? Like it or not, agree with what is said, disagree with what gossiped, simple fact of the day,  each nation is branded, between each sunrise and sunset. Here is some advanced level insight for the national leaderships on global corporate communication challenges, as what may be altering their efforts on global affairs, what might mold their global trades as the deep undercurrents of global ‘likes’ and ‘dislikes’ from the global populace shape their national global image and rate of popularly and any level of respect on world stage.

The global opinion: Observe how fast the world changed, how the ocean of “global opinion” is now drowning ponds of “national opinion”. Notice, nations already intoxicated, in joy over the popularity of their own national opinion, while having just an opposite global opinion on the world stage. What does this mean to a nation’s image supremacy, how does this translate into economic impacts? Why is any global opinion of any kind important anyway? Be cautious, if such important topics are not discussed in your boardrooms, check out the restrooms.

The fabric of humankind. Every huge, little, deadly, serious or funny incident of any kind, becomes ‘alive’ in global social media, where despite all controls its is processed with common sense with common emotions, commented and circulated around the world, many times, registered, measured, analyzed, criticized and humanized as good, bad or ugly in the minds of the global populace.  No one can stop it. Facing truth is now a new global challenge of moral strength, something that increasingly demands insight and awareness. Shunning, arguing or defending and fighting has little or no power, as the real power hidden is in critical thinking to solve common good, humankind issues.   

The 200 nations, now under their own global digital spell, responding, and adjusting their own feedback and updating reality checks, influenced by the five billion, connected populace driving the world opinion.  The voices are no longer the big old-media, as they have already lost their credibility and power,  but across the world the new known and unknown big and small clusters of people sharing their thoughts amongst their local and global connectivity and surroundings. The truth rises, because this is how the critical needs for common good and social justice advances. The fabric of humankind stretches, starts to cover all nations.

Weaponization of Ideologicalism:  Why are most nations increasingly unable to control their restless citizenry? How much more will the citizens of these nations, continuously influenced by the global opinion, facing common sense, chasing truth, turning internal tribalism, into cultural wars defining limits of ideologies, as Weaponization of Ideologicalism slowly ripping local social fabric and crushing economies. Where are the repairmen, where are the solutions, which leadership is ready to articulate and bring national mobilization of entrepreneurialism as an untapped national treasure. Which nation is ready to face reality and show their advanced skills?

The aimless directives: When nations appear aimlessly drifting into hallucinations, the lack of vision, absence of social justice, unable to control internal tribalism, cultural wars move to ideological wars. Nations fragmented and splintered, now facing street by street mental wars. The visible lack of skills at the top management, lack of speed of execution at middle level and the absence of any motivation at remaining workforces now seriously limits all new options.

The coming revolution: The next global revolution, driven by economic chaos based on social failures, while the middle classes already disappeared, may not be about the mobs of commoners with broom-sticks but most likely the imploding calm and silent systemic collapse of bureaucratic administrative blockades and fall of economic intellectualism for destroying the fabric of humankind.

The absence of dialogue, only proves lack of real pragmatic solutions, skills and competence. Electioneering, sloganeering and fakery of wars to remain in power with no real economic solution, in global opinion a colossal failure.  Therefore, “Self Mastery” urgently needed to differentiate between a mesmerized mind with an enlightened one will possibly be a way to face the new challenges. Economies will only improve when old methodologies declared broken

The new world order: No other time in the history of civilization, so many globally connected will hold responsible the so few in power for destroying the remains of world order and bringing the world to a nuclear war.  A war, suggested to eliminate five billion people. It is possible, the coming revolutions to be less about anarchy but more about establishing real meritocracy. The need to search, find and strive for real value creation to answers grassroots prosperity affairs and eliminate lingering bureaucracies with fermented layers of incompetency. How soon will the five billion connected reach a critical point to select the right players with right policies and declare common good the new ultimate goals? This may eventually lead to a new world order. Pandemic was just a sneeze, economy, now like a hole in the empty pocket, leadership like a circus show, while billions looking up. Acquire mastery. Get ready for major global shifts of major economic behaviorism. The rest is easy. 

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Mosul’s recovery moves towards a circular economy

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Five years since the end of the ISIL(so-called Islamic State in Iraq and the Levant) conflict in 2017, the International Organization for Migration (IOM) in Iraq and the UN Environment Programme (UNEP), with funding from the Government of Japan, has established a debris recycling centre in Mosul. After its initial use, the centre has now been handed over to Mosul Municipality for its continued, sustainable operation.

“On behalf of the Iraqi Government, the Ministry of Environment expresses its gratitude to the Government of Japan for generously supporting this important project and to UNEP and IOM for enabling the sustainable management of the huge quantities of conflict debris and restabilization of the liberated areas in an environmentally sustainable manner,” said Iraq’s Minister for Environment, Dr. Jasim Abdulazeez Humadi.

The handover of the Mosul debris recycling centre marks a significant step in the sustainable management of the huge volumes of debris — an estimated 55 million tonnes — created by the ISIL conflict. It also opens the way for the recycling of routine construction and demolition waste, contributing to ‘building back better’ and an increased circularity in Iraq’s development.

UNEP West Asia Regional Director, Sami Dimassi, emphasized that “by reducing waste, stimulating innovation and creating employment, debris recycling also creates an important business opportunity.” Indeed, construction companies in Mosul have expressed interest in purchasing the recycled aggregate, thereby underscoring the longer-term sustainability of debris recycling.

“This project supports recovery and livelihoods by drawing on principles of a circular economy, wherein waste and land pollution is limited through production processes that reuse and repurpose materials for as long as possible,” explained IOM Iraq Chief of Mission, Giorgi Gigauri. “Collaboration and sustainability are key priorities in IOM’s work toward durable solutions to displacement, and we are pleased to have partnered with UNEP and the Government of Japan so that this is represented not only in the function of the plant itself, but also in its functioning, by supporting local authorities to be prepared to effectively operate the plant moving forward.”

On 28 July 2022, Mosul Municipality hosted an event to officially hand over the debris recycling centre, attended by senior government officials and academia, as well as representatives from IOM, UNEP and the United Nations Assistance Mission for Iraq (UNAMI).

Masamoto Kenichi, Charge d’Affaires, Embassy of Japan to Iraq stated: “We are glad to know that the project funded by the government and people of Japan has contributed to cleanup of debris and reconstruction of Mosul. We would like to commend UNEP, IOM and the city of Mosul for their tremendous efforts of turning the legacy of ISIL’s devastation into building blocks of reconstruction”.

Through the rubble recycling project, nearly 25,000 tonnes of debris have been recovered and sorted, of which around half was crushed into recycled aggregate. Material testing of the recycled aggregate endorsed by the National Center for Structural Tests of the Ministry of Planning confirms its compliance with the Iraqi State Commission for Roads and Bridges design standards for road foundational layers and its suitability for several low strength end-use applications such as concrete blocks and kerbstones.

The project created 240 much-needed jobs through cash-for-work schemes targeting vulnerable persons, including 40 women.

Building on this experience, IOM has set up two other debris recycling operations in Sinjar and Hamdaniya in Ninewa Governorate, and a third in Hawija in Kirkuk Governorate, where a pilot phase using a mobile crusher was implemented in al-Buwaiter Village in 2021. In addition, two other conflict-affected governorates — namely Salah al-Din and Anbar — have  also shown a high-level of interest in replicating and scaling up debris recycling in their own regions. 

UNEP has been supporting Iraq in cleaning up the huge volumes of debris created by the ISIL conflict since June 2017. Initially, this included carrying out technical assessments and planning workshops with UN-Habitat, and subsequently designing and implementing debris recycling pilot projects to support returns in Mosul, Kirkuk and other conflict-affected areas in cooperation with IOM.

UNEP

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Digital Futures: Driving Systemic Change for Women

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Authors: Erin Watson-Lynn and Tengfei Wang*

As digital technology continues to unlock new financial opportunities for people across Asia and the Pacific, it is critical that women are central to strategies aimed at harnessing the digital financial future. Women are generally poorer than men – their work is less formal, they receive lower pay, and their money is less likely to be banked. Even when controlling for class, rural residency, age, income, and education level, women are overrepresented among the world’s poorest people in developing countries. Successfully harnessing digital technology can play a key role in creating new opportunities for women to utilise formal financial products and services in ways that empower them. 

Accelerating women’s access to the formal economy through digital innovations in finance increases their opportunity to generate an income and builds resilience to economic shocks. The recently issued ESCAP guidebook titled, Harnessing Digital Technology for Financial Inclusion in the Asia Pacific, highlights the fact that mechanisms to bring women into the digital economy are different from those for other groups, and that tailored policy responses are important for women to fully realise their potential in the Asia-Pacific region.

Overwhelmingly, the evidence tells us that how women utilise their finances can have a beneficial impact on the broader community. When women have bank accounts, they are more likely to save money, buy healthier foods for their family, and invest in education. For women who receive Government-to-Person (G2P) payments, there is significant improvement in their lives across a range of social and economic outcomes. Access to safe, secure, and affordable digital financial services thus has the potential to significantly improve the lives of women.

Despite the enormous opportunity, there are numerous constraints which affect women’s access to financial services. This includes the gender gap in mobile phone ownership across Asia and the Pacific, lower levels of education (including lower levels of basic numeracy and literacy), and lower levels of financial literacy. This complex web of constraints means that country and provincial level diagnostics are required and demands agile and flexible policy responses that meet the unique needs of women across the region.

Already, across Asia and the Pacific, governments are implementing innovative policy solutions to capture the opportunities that come with digital finance, while trying to manage the constraints women often face. The policy guidebook provides a framework to examine the role of governments as market facilitators, market participants and market regulators. Through this framework, specific policy innovations drawn from examples across the region are identified which other governments can adapt and implement in their local markets.  

A good example of how strategies can be implemented at either the central government or local government levels can be found in Pakistan. While central government leadership is important, embedding tailored interventions into locally appropriate strategies plays a crucial role for implementation and effectiveness. The localisation of broader strategies needs to include women in their development and ongoing evaluation. In the Khyber Pakhtunkhwa province, 50,000 beneficiary committees comprising local women at the district level regularly provide feedback into the government’s G2P payment system. The feedback from these committees led to a biometric system linked to the national ID card that has enabled the government to identify women who weren’t receiving their payments, or if payments were fraudulently obtained by others.

In Cambodia and the Philippines, governments have implemented new and innovative solutions to support remittance payments through public-private-partnerships and policies that enable access to non-traditional banks. In Cambodia, Wing Money has specialised programs for women, who are overwhelmingly the beneficiaries of remittance payments. Creating an enabling environment for a business such as Wing Money to develop and thrive with these low-cost solutions is an example of a positive market intervention. In the Philippines, adjusting banking policies to enable access to non-traditional banking enables women, especially those with micro-enterprises in rural areas, to access digital products.

While facilitating participation in the market can yield benefits for women, so can regulating in a way that drives systemic change. For example, in Lao People’s Democratic Republic and India, different mechanisms for targets are used to improve access to digital financial products. In Lao People’s Democratic Republic, the central government through its national strategy, introduced a target of a 9 per cent increase in women’s access to financial services by 2025. In India, their targets are set within the bureaucracy to incentivise policy makers to implement the Digital India strategy and promotions and job security are rewarded based on performance.

These examples of innovative policy solutions are only foundational. The options for governments and policy makers at the nexus of market facilitation, participation and regulation demands creativity and agility. Underpinning this is the need for a baseline of country and regional level diagnostics to capture the diverse needs of women – those who are set to benefit the most of from harnessing the future of digital financial inclusion.

*Tengfei Wang, Economic Affairs Officer

This article is the second of a two-part series based on the findings of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) Policy Guidebook: Harnessing Digital Technology for Financial Inclusion in Asia and the Pacific, and is jointly prepared by ESCAP and the Griffith Asia Institute.source: UNESCAP

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