By Nick Kochan
The 250,000 protesters on the streets of Bucharest yesterday will not welcome it, but Romania’s new government are to be congratulated for reversing what has become a national obsession with corruption.
The announcement that they are planning to decriminalise some forms of official misconduct, pardon some 3,000 people convicted of minor acts of graft –the legal measure covers those who stole less than $50,000 from the state – and release them from jail not only frees up the prisons but sounds a warning to its over-zealous National Anti-Corruption Directorate (DNA). Read more
By Carlos Mera, Rabobank
As the world grapples with major economic and geo-political changes, we have predicted that food prices – which like all commodities are influenced by such forces – will remain low during 2017.
We believe the fundamentals support that view: while the spectre of inflation stalks some economies, stock levels of food commodities are at record levels, applying some downward pressure to prices. Many of these reserves are held by China. Therefore, what action the world’s most populous country takes in 2017 will have profound repercussions for everybody else. Read more
By Yigal Chazan, Alaco
Over the past two decades, large swathes of the eastern Democratic Republic of Congo (DRC) have been subjected to conflict between rival militia groups, which together with some Congolese army factions, have benefited financially from the artisanal mining of tin, tantalum, tungsten and gold.
These so-called “conflict minerals” have found their way into international supply chains serving a range of end-users – including companies in the electronics, automotive, aerospace and jewellery sectors – prompting efforts to regulate DRC artisanal mines and strengthen corporate due diligence procedures. Read more
By Ganeshan Wignaraja and Juzhong Zhuang*
Rising protectionist sentiment in the West and a dramatic decline in global trade since 2011 have led many to speculate that Asia’s era of export-led growth will end soon. This speculation is overdone. While the slowdown in trade does demand responses, Asia is well positioned to be a bulwark against protectionism. In fact, it can lead global trade in the years to come.
But, getting the responses right will require a clear understanding of the causes. Policy makers need to ask first what explains the export slowdown, and what this means for Asian economies. The story starts with the great recession in 2008, which left advanced countries stuck in low growth, low demand environments that have weighed heavily on Asia’s export-dominated economies. Read more
By Paola Subacchi, Chatham House
The few weeks between the beginning of 2017 and the Chinese new year may be used by the Chinese monetary authorities to tweak some policies. The exchange rate is an area in desperate need of reform.
Will China finally embrace the market and let the renminbi float?
Despite the ambition to turn it into an international currency – i.e. a currency used to invoice and settle international trade, and to be held as an asset – the renminbi remains a currency with limited international demand. Read more
By Joseph Losavio and Michael Drexler , World Economic Forum
Is 2017 the year Argentina finally turns a century of economic torpidity around? Last year’s signs were promising: Argentines swept President Mauricio Macri into office with a mandate to reform the moribund economy, attract foreign investment, and restore Argentina to its place as a Latin American leader and a global player.
But to regain its past riches, more will be needed than a reform promises. Here’s three areas that need action in 2017. It’s remarkable Argentina even needs a renaissance. Exactly 100 years ago, it was already one of the world’s wealthiest economies. Read more
By Matthew Reed, Ovum
The number of mobile subscriptions in Africa will reach one billion by the end of 2016, according to figures from research firm Ovum. But even as the continent nears this landmark, its telecoms market is changing fast, and data and digital services rather than mobile voice and SMS will lead the next phase of development.
In the first decade of the 2000s, Africa underwent a mobile revolution as the roll-out of mobile networks across the continent brought communications technology to many for the first time. By the end of the decade, the mobile-money service M-Pesa was showing that mobile services might be able to plug some of the other gaps in Africa’s infrastructure, such as in financial services. Read more
By Nick Kochan
The election of a majority Social Democratic PSD party in Romania this past weekend gives the country a chance to push the reset button on its relations with foreign investors.
After a year when the government has been drawn into fruitless squabbles in commercial courts and arbitrations with no less than five international companies, now is the time to reassure investors that Romania is open for business. The time to close the book on introspective and opaque government is long overdue.
Energy companies have been in the forefront of these battles with Romanian officialdom. So the government took Enel, the Italian energy company, to court over a breach in a privatisation contract but ended in July 2016 facing a €1bn bill. E.on, the German energy company, won an arbitration dispute in Paris and the government was forced to pay its legal costs. Read more
By Jon Fredrik Baksaas, GSMA
There are a myriad of social and economic benefits made possible by bringing communication services to previously unconnected populations. This commitment to “Digital Inclusion” – the ability to extend connectivity to all corners of the globe – is driving internet access and usage, and providing access to vital services such as healthcare, education and commerce.
One barrier to digital inclusion is the availability of networks. To address this mobile operators have invested billions rolling out 3G/4G mobile broadband across the globe. Today mobile broadband networks cover 80 per cent of the world’s population, providing internet access to many markets where fixed access is either prohibitively expensive or non-existent. Read more
By Ariel Cohen, Atlantic Council
The mood is festive in the Russian capital, and expectations are high that Donald Trump’s elections may turn a new page in the difficult relationship between Moscow and Washington.
The death spiral of US-Russian ties stretches back through the Barack Obama years to George W. Bush’s second term, when Russia invaded neighboring Georgia. Things got as bad as during the darkest days of the Cold War, but now the time may have come to reverse course.
Mr Trump, Moscow’s logic goes, has a warm place in his heart for Russia’s long-serving president, Vladimir Putin. He expresses realpolitik instincts compatible with Putin’s worldview. Read more
By Tomasz Telma, IFC
If you want to see how quickly the developing world is urbanising—and the problems that this creates—look no further than Istanbul.
In 1990, Turkey’s commercial capital was home to about 6.5m people. By 2014, that number had more than doubled to 16m, creating an urban crush that has sparked everything from blackouts to 2 am traffic jams.
But Istanbul is far from alone. Its struggles echo those of many cities in the developing world, where a massive urban migration has stretched local infrastructure to a breaking point, entrenching poverty and driving up greenhouse gas emissions. Read more
By Kevin Martin, HSBC
China’s consumers are by no means the wealthiest in the world. But they are years ahead of their counterparts in many developed economies in terms of how they shop and pay for what they buy. In this, they are revolutionising the way consumer finance is conducted in the world’s second-biggest economy.
Like so many of the changes sweeping China, the uptake of internet and digital technologies has happened with head-spinning speed.
As recently as 2000, a mere 1.7 per cent of mainland Chinese were online. Now, the country has more than 700m internet users – a penetration rate of more than 50 per cent. Read more
By Raffaello Pantucci, RUSI
There has been much speculation on the role of the Silk Road Fund (SRF) and Asian Infrastructure Investment Bank (AIIB) in China’s outward investment push.
They are both instruments created by Beijing to provide economic firepower and bring international credibility to the ‘Belt and Road’ vision that has become President Xi Jinping’s keynote foreign policy concept. But in reality they have both undertaken a series of investments that, while substantial and linked to ‘Belt and Road’ countries, pale in size next to China’s overall outward investments. Read more
By Mouayed Makhlouf, IFC
Look out across the Middle East and North Africa (MENA), and you’ll see a rising tide of youth unemployment. In fact, MENA has the highest rate of official unemployment of any region in the world, averaging at around 11 per cent.
Those are sobering numbers – and a sign that the region hasn’t done enough to create opportunities for its young people. But unemployment in the Middle East and North Africa doesn’t need to be that high.
The region has a large number of companies, many in up-and-coming industries like information technology or logistics, which need workers. Yet job seekers just don’t have the technical skills that employers are looking for, causing many positions to remain unfilled. Read more
By Martin Fischer, Alaco
A series of recent Chinese takeovers of Germany’s top tech companies has unnerved many Germans who fear the trend could undermine the economy. Germany has always been more comfortable as an investor than a recipient of investment, with the Chinese shopping spree sparking a wave of protectionist sentiment, which some German politicians are looking to exploit.
Germany has emerged as the preferred destination for Chinese takeovers in Europe. In the first half of 2016 alone, EY, an accountancy firm, reported that Chinese investment in Germany exceeded $10bn – more than the combined total for the previous five years. But Germans are nervous about the influx of cash, primarily because the companies being acquired are small and medium-sized enterprises that form the backbone of the economy. Read more
By Isabel Stoker, Alaco
Sri Lanka is set to sign a major trade deal with India later this year, which it hopes will be the first step towards the island becoming a financial and business hub in the region. But the government of Ranil Wickremesinghe, prime minister, will have to work harder to win over domestic opponents of the Economic and Technological Cooperation Agreement (ETCA) who fear it will result in the country’s exploitation by Indian businesses.
Earlier this month Mr Wickremesinghe announced that the ETCA would be signed by the end of December. Sri Lanka has two other free trade agreements in the pipeline, with Singapore and China. The government began negotiations on the former in June and is expected to complete the latter by March 2017. Read more
By Max J. Zenglein, Mercator Institute for China Studies
China’s leaders place high hopes on the vibrancy of the economy’s service sector, but in reality it has not been able to fill the void left by the decline of manufacturing. The inability of services to pick up the slack in turn creates a temptation for the government to delay overdue structural reforms while maintaining a reliance on investment-driven growth. Read more
By Septimus Knox, Alaco
Remote, long-forgotten industrial towns rarely make the front pages in Russia, never mind internationally. But for a few days in September Norilsk, home to the world’s largest producer of nickel and palladium, hit the headlines, although for all the wrong reasons.
A chemical spill turned the Daldykan River red, and photographs of the contamination went viral. Norilsk and other so-called monotowns are located in some of the most inhospitable parts of the country. Centred on a single factory, plant or mill, they fuelled Soviet-era industrialisation.
They remain key to Russia’s economy, yet many are now in terminal decline. Read more
By Amal-Lee Amin, Inter-American Development Bank
Four years ahead of schedule, the Paris climate change agreement is expected to enter into force next month. Latin American and Caribbean countries played a major role in the diplomatic push to secure the agreement and are now making progress on ratifying it.
As of today, over a dozen countries from the region have also ratified – including its largest emitters, Brazil and Mexico, and also some of its smallest and most vulnerable, Barbados and Belize.
Yet ratification is only an initial step towards implementation. Fortunately, the region has made progress on designing the policies and institutions to implement the agreement. Peru, Brazil, Mexico and Costa Rica were among the first developing countries to put forward voluntary emission reduction pledges starting in 2008. Read more
By Simon Currie and Laura Kiwelu, Norton Rose Fulbright
Harnessing abundant and free solar energy has long been regarded as the obvious solution to Africa’s persistently low electrification rates. After a sluggish start due to unproven technology and high capital costs, we are now witnessing a solar revolution which will transform Africa’s energy landscape over the next decade.
In February 2015 the first solar photovoltaic (or PV) grid connected plant in Africa outside of South Africa was inaugurated at the Agahozo-Shalom Youth Village in Rwanda, a refuge for those orphaned during and after the 1994 genocide.
With a layout resembling the Africa continent, its ramifications have spread far beyond the 8.5MW it exports to the grid, attracting visitors such as Bono and members of the US Senate. In Africa the usual development period for power plants is nine years from inception. Yet this project was generating power barely two years after completion of the feasibility study. Read more