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Compounding Crises: Pandemic Disruptions and Weak Recovery Delay Time to Gender Parity to 132 Years

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After a big COVID hit, the gender gap hasn’t bounced back, according to the World Economic Forum’s Global Gender Gap Report 2022. As the global economy enters its third year of continued disruption, it will take another 132 years (compared to 136 in 2021) to close the gender gap.

The report suggests that of the 146 economies surveyed, just one in five has managed to close the gender gap by at least 1% in the past year. As a result, while gains have been made in the past year, they have reduced the time it will take to reach gender parity by only four years. This progress does little to offset the setback of an entire generation recorded in 2020-2021 at the start of the pandemic.

“The cost of living crisis is impacting women disproportionately after the shock of labour market losses during the pandemic and the continued inadequacy of care infrastructure. In face of a weak recovery, government and business must make two sets of efforts: targeted policies to support women’s return to the workforce and women’s talent development in the industries of the future. Otherwise, we risk eroding the gains of the last decades permanently and losing out on the future economic returns of diversity,” says Saadia Zahidi, Managing Director at the World Economic Forum.

The Global Gender Gap Report, now in its 16th year, benchmarks the evolution of gender-based gaps in four areas: economic participation and opportunity; educational attainment; health and survival; and political empowerment. It also explores the impact of recent global shocks on the growing gender gap crisis in the labour market.

Across the 146 countries covered in 2022, the health and survival gender gap has closed by 95.8%, educational attainment by 94.4%, economic participation and opportunity by 60.3% and political empowerment by 22%. Between 2021 and 2022, the economic participation and opportunity sub-index increased by 1.6%, based mainly on gains for women in professional and technical roles and a decrease in the wage gap, even as gender gaps in the labour force increased. For the health and survival sub-index, there was a small improvement from 95.7% to 95.8%, while the educational attainment sub-index fell from 95.2% to 94.4% and political empowerment stalled at 22%.

Taking a longer view over 16 years, at the current rates of progress it will take 155 years to close the political empowerment gender gap – 11 more than predicted in 2021 – and 151 years for the economic participation and opportunity gender gap. Although 29 countries have reached full parity, it will still take 22 years to close the educational attainment gender gap. And while more than 140 countries have closed at least 95% of their health gaps, overall backsliding in health and survival means there may be a reversal.

Global and regional highlights 2022

For the 13th consecutive year, Iceland is the most gender-equal country in the world and the only one to have closed more than 90% of the gender gap. The Top 10 countries include:

North America is the best performing region, with 76.9% of its gender gap closed. The number of years it will take to close the gap has fallen from 62 to 59. There is slight improvement in the United States, while Canada’s score does not evolve.

Europe (76.6%) is close behind, clocking an improvement of 0.2% since 2021, resulting in a 60-year wait until the gender gap is closed. Six of the top 10 countries are European and nine of the 35 countries in the region have improved their score by at least 1%. Albania, Iceland and Luxembourg are the region’s three most improved countries.

Latin America and the Caribbean (72.6%) ranks third regionally, improving 0.4% points since the previous edition. Based on the current pace of progress, Latin America and the Caribbean will close the gap in 67 years. However, within the region only six of the 22 countries indexed in this edition improved their gender gap score by at least one percentage point, suggesting increasing regional divergence.

Central Asia (69.1%) has stalled in its progress, with a score unchanged from 2021. At this pace, it will take 151 years to close the regional gender gap. Six of the 10 countries in the region have seen an improvement in their scores, with Moldova, Belarus and Georgia representing the top-ranked countries.

East Asia and the Pacific (69%) saw 13 of the 19 countries in the region make progress since the last edition. But at its current pace, the region will need 168 years to close the gender gap. Progress is taking place at different speeds between countries, risking further regional divergence. The region’s top performers are New Zealand (84.1%), Philippines (78.3%) and Australia (73.8%).

Sub-Saharan Africa (68.7%) has registered its best score, with an improvement of 1.1% in the past year, reflecting positive changes in the economic gender gap in countries such as Nigeria, Ethiopia, Democratic Republic of the Congo and Kenya. At the current rate, it will take 98 years to close the gender gap.

Middle East and North Africa (63.4%) has the second-largest gender gap yet to close, with Israel, United Arab Emirates and Lebanon the highest performing countries. Some progress was made in closing the economic gender gap (+2%), with a number of countries improving women’s labour force participation and the share of women in technical roles. The region’s score remains similar to the last edition, which gives a timeframe of 115 years to close the gap.

South Asia (62.3%) has the largest gender gap of all regions, with low scores across all measured gender gaps and little progress made in most countries since the last edition. At its current pace, it will take 197 years to close the gender gap in the region. The economic gender gap has closed by 1.8%, with increases in the share of women in professional and technical roles in countries including Bangladesh and India, as well as Nepal.

Gender gaps in the workforce: a looming crisis

Global gender parity for labour force participation had been slowly declining since 2009 in the Global Gender Gap Index. The trend, however, was exacerbated in 2020, when gender parity scores decreased precipitously over two consecutive editions. As a result, in 2022, gender parity in the labour force stands at 62.9%, the lowest level registered since the index was first compiled. Among workers who remained in the labour force, unemployment rates increased. While the current unemployment rates for both men and women are higher than pre-pandemic levels, women’s 2021 global unemployment rate (6.4%) was higher than that of men (6.1%).

The disproportionately negative labour market impact of the pandemic can be explained partly through the sectoral composition of the shock and partly through continued disparities in care responsibilities that were exacerbated by the pandemic. The majority of care work fell on women as childcare facilities and schools were closed. Even before the pandemic, men’s share of time in unpaid work as a proportion spent in total work was 19%, while for women this was 55%.

The picture is brighter when it comes to women in organizational leadership. According to high-frequency data from LinkedIn from 23 leading economies, women have been hired into leadership roles in increasing numbers since 2016. While the share of women hired into leadership was 33.3% in 2016 in this set of countries, it increased to 36.9% in 2022. Progress stalled during the pandemic, with the annual share of women hired into leadership positions holding at 35% between 2019 and 2020 but then increasing to 36% in 2021.

This overall progress, however, masks differences in industries. Among the industries that hired the highest share of women into leadership positions in 2021 are non-governmental and membership organizations (54%), education (49%), government and public sector (46%), personal services and well-being (46%), healthcare and care services (46%), and media and communications (46%). In contrast, six industries hired significantly more men than women into leadership positions in 2021: Technology (30%), agriculture (28%), energy (25%), supply chain and transportation (25%), manufacturing (22%) and infrastructure (21%).

Finally, learning is also segmented by gender, changing the composition of talent available with future-ready skills. In higher education globally, women continue to be overrepresented in education and health and welfare degree subjects compared to men and underrepresented in STEM fields. There are nearly four times as many men as women graduates in information and communication technologies (ICT) and in engineering and manufacturing. High-frequency data from Coursera suggests that gender gaps are smaller in online enrolment. In ICT, for example, gender parity increased in online training between 2019 and 2021 during an overall rise in online learning. The Report also contains new metrics on wealth and on health from data collaborations with WTW and Hologic.

Urgency for action

Closing gender gaps remains a critical driver of national prosperity. Countries that invest in all of their human capital and make it easier for their populations to balance work and family life tend to be more prosperous. With an increasingly uncertain economic outlook, the Global Gender Gap Report 2022 calls on more leaders to unleash the creativity and dynamism of their countries’ human capital to overcome the current crises and accelerate a strong recovery.

The Closing the Gender Gap Accelerators work with government and business in advanced and developing economies to create structed public-private collaborations for rapid acceleration to economic parity, focusing on increasing women’s participation in the workforce, closing the gender pay gap and helping more women advance into leadership roles and develop in-demand skills. The model has been adopted in 12 economies, with Ecuador, Kazakhstan, Japan and Mexico joining the accelerator network in 2021-2022.

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Vietnam’s Economy Forecast to Grow 7.5% in 2022

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Vietnam’s economic recovery accelerated over the last six months on the back of resilient manufacturing and a robust rebound in services. GDP growth is forecast to surge from an estimated 2.6 percent in 2021 to 7.5 percent in 2022, while inflation is projected to average 3.8 percent over the year, a World Bank economic update for Vietnam released today says.

Vietnam’s economy expanded 5.2 percent[1] in Q4-2021, 5.1 percent in Q1-2022, and 7.7 percent in Q2-2022, as consumers satisfied pent-up demand and foreign tourist arrivals picked up, according to the report,  “Taking Stock: Educate to Grow,” the World Bank’s bi-annual economic outlook for Vietnam.  

However, this positive outlook is subject to heightened risks that threaten recovery prospects.  Risks include growth slowdown or stagflation in main export markets, further commodity price shocks, continued disruption of global supply chains, or the emergence of new COVID-19 variants.  Domestic challenges include continued labor shortages, the risk of higher inflation, and heightened financial sector risks.

Given the nascent domestic recovery, the weakening global demand outlook, and heightened inflation risks, the report suggests a proactive response by the authorities. In the short run, on the fiscal front, the focus should be on the implementation of the Recovery and Development policy package and expanding targeted social safety nets to help buffer the poor and vulnerable from the effects of the fuel price shock and rising inflation. In the financial sector, close monitoring and strengthening non-performing loan reporting and provisioning as well as  adopting an insolvency framework would be recommended.

If upside risks to inflation materialize — with core inflation accelerating and the consumer price index moving above the 4 percent target set by the government — the State Bank of Vietnam should be ready to pivot to monetary tightening to quell inflationary pressures through interest rate hikes and tighter liquidity provision. 

“To sustain economic growth at the desired rate, Vietnam needs to increase productivity by 2-3 percent every year.” said Carolyn Turk, World Bank Country Director for Vietnam. “International experiences have shown that higher worker’s productivity can be achieved by investing in the education system, as an important part of a basket of investments and reforms. A competitive workforce will generate much-needed efficiency for Vietnam in the long term.”

The report argues that transforming the higher education system will be key to boosting Vietnam’s productivity and help achieve its goal of becoming an upper-middle-income country by 2035 and high-income country by 2045. To match average higher education enrollment levels in upper-middle economies,  3.8 million Vietnamese students would need to be enrolled in higher education institutions, almost twice as many as enrolled in 2019.

Reforms to Vietnam’s higher education system could help support development objectives, the report says. The increasing financial costs of pursuing higher education and the perception of diminishing economic returns from pursuing higher education have weakened demand. The system is further undermined by falling short of providing skills sought by employers, underinvestment by the state, and a weak and fragmented institutional structure governing higher education.

The report details suggestions for improving access to higher education, enhancing the quality and relevance of instruction, and making more efficient use of resources. Suggestions include expanding the use of digital technologies, enhancing the role of the private sector, and streamlining the regulatory framework.

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Financial education gaps are primary barrier to retail investing in capital markets

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New research from the World Economic Forum finds that 40% of non-investors have chosen not to invest because they do not know how or find it too confusing. Furthermore, roughly 70% of people would be more likely to invest, or invest more, with expanded financial education

Done in collaboration with BNY Mellon and Accenture, The Future of Capital Markets: Democratization of Retail Investing also finds that increased participation of retail investors in capital markets is a largely positive trend. Though some concerns about riskier investments remain, retail investors are showing themselves to be prudent investors using markets to build long-term wealth.

“Even amid market volatility, participation in capital markets can empower people to take ownership of their financial future,” said Meagan Andrews, Investing Lead at the World Economic Forum. “We’re just now starting to understand the new wave of retail investors and the power they are wielding in the market. It’s important industry leaders take steps to empower individuals so they can optimize financial decisions for their betterment, whether they currently invest or not.”

Based on a global survey of over 9,000 respondents from 9 countries and expert interviews, the report highlights the importance of enhancing personalized advice for retail investors and improving the reliability of information and investor protections. It also underscores opportunities to improve education, trust and access to increase inclusion in global capital markets.

With the current market volatility, industry players, policy-makers and others need to act now to ensure the benefits of investing are increasingly accessible worldwide.

“Global capital markets are undergoing a fundamental transformation, with more individual and retail investors seeking access than ever before in history,” said Akash Shah, Chief Growth Officer at BNY Mellon. “This research highlights opportunities for the entire financial industry to build the trust and transparency needed to empower and democratize market participation in underserved communities around the world.”

Trends of retail investors
The survey results provided critical insights into the factors and mindsets impacting individuals’ decisions to enter capital markets globally.

Notably, the survey found that individuals primarily look to capital markets to build long-term wealth, especially in emerging markets. Half of those surveyed were investing to save for retirement or to build generational wealth.

Retail investors are skewing younger, with Gen Z and younger Millennials investing at higher rates. Younger investors are much more likely than their peers to have received financial education earlier in life.

Meanwhile, non-investors are less confident they will achieve their long-term financial objectives and, when compared to investors, a higher proportion only learned about investing many years after entering the workforce. Their main reasons for avoiding financial markets were fear of losing money and because of an investing knowledge gap.

Generational wealth also plays a vital role in deciding to invest early. Respondents whose parents invested in the market reported that they began investing earlier in life compared to those with parents who did not invest.

The survey also revealed significant gaps in product awareness. For instance, surveyed investors noted they had a greater understanding of newer products like cryptocurrencies and non-fungible tokens (NFTs) compared to more traditional instruments like stocks and bonds.

Expanding the benefits of retail investing

There are many ways capital markets and global society can work together to grow wealth for more individuals in a responsible manner.

1. Financial literacy and improving investor education

Personal finance education – from setting a budget to learning how to secure one’s retirement – is integral to building wealth responsibly. Industry players should focus on increasing basic financial literacy, promoting responsible investment strategies and improving proactive retirement planning outside of pensions.

Providing information is not enough – content should be fit for purpose, with efforts to make it as understandable as possible. Both policy-makers and private sector actors need to improve their tactics to meet the desires of today’s investors.

2. Personalized, outcome-oriented advice for all

Solutions that financial institutions currently offer are often siloed and don’t always resonate with investors. Those at lower wealth thresholds are often left with few options to get financial advice: 80% of current investors state being able to speak with an adviser is essential to making an investment decision but only 48% are able to turn to a financial adviser or wealth manager for advice.

All investors should have access to the tools and guidance they need to be successful participants in capital markets. This should be inclusive of investors of all income and wealth levels. The industry must expand access to personalized advice and scale services to thrive to meet increasing retail investor demand – this must happen across all wealth brackets.

3. Collaboration and public-private partnerships

Increased collaboration across the industry, including public-private partnerships, will be needed.

Brokerages, wealth managers and exchanges are integral to this effort due to their proximity to retail investors and the speed at which they can enact change. From educational efforts to initiatives to lower the barriers to entry for retail investors, public-private partnerships will be essential.

“Increasing market participation and empowering retail investors has to include collaboration from all stakeholders,” said Kathleen O’Reilly, Global Lead, Accenture Strategy. “Financial institutions especially, from the C-suite to individual wealth managers, must play a critical role in offering relatable education efforts in addition to the investment products that will help investors become smarter and more confident.”

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Global economy: Outlook worsens as global recession looms

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Still reeling from the COVID pandemic and Russia’s invasion of Ukraine, the global economy is facing an increasingly murky and uncertain outlook, according to the latest report released on Tuesday by the International Monetary Fund (IMF).

The World Economic Outlook Update July 2022: Gloomy and More Uncertain, highlights the significant consequences of the stalling of the world’s three main economic powerhouses – the United States, China and the major European economies.

“The outlook has darkened significantly since April,” said Pierre-Olivier Gourinchas, IMF Economic Counsellor and Director of Research.

“The world may soon be teetering on the edge of a global recession, only two years after the last one”.

The baseline forecast for global growth is for it to slow from 6.1 per cent last year, to 3.2 per cent in 2022 – 0.4 per cent lower than forecast in the last Outlook update in April.

Three key economies

With higher-than-expected inflation – especially in the US and the largest European economies – global financial conditions are becoming tighter.

In the US, reduced household purchasing power and tighter monetary policy will drive growth down to 2.3 per cent this year and one percent next year, according to the outlook.

China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, with negative effects from Russia’s invasion of Ukraine continuing.

Moreover, further lockdowns and a deepening real estate crisis there has pushed growth down to 3.3 per cent this year – the slowest in more than four decades, excluding the pandemic.

And in the Eurozone, growth has been revised down to 2.6 per cent this year and 1.2 percent in 2023, reflecting spillovers from the Ukraine war and tighter monetary policy.

“As a result, global output contracted in the second quarter of this year,” said Mr. Gourinchas.

Inflation

Despite the global slowdown, inflation has been revised up, in part due to rising food and energy prices.

This year it is anticipated to reach 6.6 per cent in advanced economies and 9.5 per cent in emerging market and developing economies – representing upward revisions of 0.9 and 0.8 percentage points respectively. And it is projected to remain elevated for longer.

Broadened inflation in many economies reflects “the impact of cost pressures from disrupted supply chains and historically tight labour markets,” the IMF official stated.

Downward risks

The report outlines some risks ahead, including that the war in Ukraine could end European gas supply from Russia altogether; rising prices could cause widespread food insecurity and social unrest; and geopolitical fragmentation may impede global trade and cooperation.

Inflation could remain stubbornly high if labour markets remain overly tight or inflation expectations are too optimistic and prove more costly than expected.

And renewed COVID-19 outbreaks and lockdowns threaten to further suppress China’s growth.

“In a plausible alternative scenario where some of these risks materialize…inflation will rise and global growth decelerate further to about 2.6 per cent this year and two per cent next year, a pace that growth has fallen below just five times since 1970,” said the IMF economist.

“Under this scenario, both the United States and the Euro area experience near-zero growth next year, with negative knock-on effects for the rest of the world”.

Destabilizing inflation

Current inflation levels represent a clear risk to macroeconomic stability, according to the outlook.

Responding to the situation, central banks in advanced economies are withdrawing monetary support faster than expected, while many in emerging market and developing economies began raising interest rates last year.

“The resulting synchronized monetary tightening across countries is historically unprecedented, and its effects are expected to bite, with global growth slowing next year and inflation decelerating,” said Mr. Gourinchas.

Policy priorities

While acknowledging that tighter monetary policy would have economic costs, the IMF official upheld that delaying it would only exacerbate hardship.

And hampered by difficulties in coordinating creditor agreements, how and whether debt can be restructured, remains unpredictable.

He argued that domestic policies responding to the impacts of high energy and food prices should focus on those most affected, without distorting prices.

“Governments should refrain from hoarding food and energy and instead look to unwind barriers to trade such as food export bans, which drive world prices higher,” advised the IMF official.

Meanwhile, mitigating climate change continues to require prompt multilateral action to limit emissions and raise investment to accelerate a “green transition”.

Policymakers are urged to ensure that measures are temporary and only cover energy shortfalls and climate policies.

Teetering on the edge

From climate transition and pandemic preparedness to food security and debt distress, multilateral cooperation is key, said the IMF economist.

“Amid great challenge and strife, strengthening cooperation remains the best way to improve economic prospects and mitigate the risk of geoeconomic fragmentation,” he underscored.

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