Global

By Dimitris Tsitsiragos, International Finance Corporation

Climate change is not just an environmental challenge— it is a fundamental threat to development in our lifetime. Without immediate action targeted at emissions reductions by the international community, climate change could result in an additional 100m people living in extreme poverty by 2030 and reverse many of the development gains of the last decade. A 2007 United Nations study projected adaptation finance needs for developing countries would start at $28bn annually by 2030.

The costs for this cannot be borne by the public sector alone. There is a key role for the private sector, including the financial industry, to play in the struggle for a greener future. In fact, the private sector is the largest source of climate finance, devoting $243bn in 2014 to climate-related investments, according to the Climate Policy Initiative’s Global Landscape of Climate Finance 2015. Read more

By Felipe Calderón, Global Commission on the Economy and Climate

Over the next fifteen years, the world needs to invest more in new infrastructure and upgrades than everything that exists today. This means we have a crucial window of opportunity to build it right, reflecting the new international priorities of the Sustainable Development Goals and the Paris Climate Agreement.

If we continue on our current high-carbon economic model, the world will need to invest more than $90tn in infrastructure. But it won’t cost much more to build our energy, transport, water, and telecommunications systems in a low-carbon way. Making our infrastructure cleaner and more sustainable could add as little as 5 per cent to upfront costs, which could be fully offset by lower operating costs. It would also make our economy cleaner, more efficient, and more productive. Plus, it would reduce the enormous costs of adapting to climate change. Read more

Matthew Blake, World Economic Forum and Gloria M. Grandolini, World Bank

Maria owns a tiendita, a small local shop on a side of the road in Medellin, Colombia, where she sells various items, including local soft drinks. But some potential customers are unable to buy anything at this tiendita — Maria’s shop is a cash-only operation. This scenario is not unique to this store: it demonstrates the omnipresent role cash has across the globe.

We estimate that in 2015, global cash and cheque payments among micro, small, and medium-sized retailers (MSMRs) stood at $19tn, compared to total payments to MSMRs – including those from various types of card – of $34tn. The majority of these cash transactions happen in emerging markets.

This first estimate of the size of the cash-based economy reveals the prevalence of cash in the global economy and suggests the size of the opportunity for electronic payments, which include swiping a card or tapping a smartphone. To put $19tn into context, it is larger than the GDP of the United StatesRead more

The European, regional and global economic and political spillovers from the Middle East-Africa refugee crisis continue to defy lasting solutions, particularly in financing the absorption and resettlement of displaced millions where immediate costs reach billions of dollars.

The main UN refugee agency was chronically underfunded before the outbreak of the Syrian civil war and the Islamic State menace, which have caused additional lost output of $35bn in frontline countries according to development agency estimates. Read more

By Chandran Nair, Global Institute for Tomorrow

In April this year, Kenya’s President, Uhuru Kenyatta, burned over 105 tonnes of elephant ivory to protest the continued poaching of elephants. The Associated Press quoted President Kenyatta as saying that “…for us ivory is worthless unless it is on our elephants.”

At the same time, he hosted the “Giants Club” Summit, a meeting of African leaders to bolster the protection of elephants. The ivory burn — the largest in history — is a reminder that conservation is not just the purview of activists in the West, but also something that is dear to the hearts of many governments and people in the developing world. It should also be noted that some African commentators have been critical of this action arguing that in the final analysis it still panders to Western arguments about how to put an end to poaching. Read more

We are facing a growing and menacing threat posed by pandemics. Recent years have witnessed SARS, bird flu, MERS, Ebola and now the Zika virus. With each new discovery, our response is bewilderingly clumsy, and we seem to be no more equipped to respond than before. In many ways, we tie our own noose. History is littered with examples of action performed too little, too late.

Increasing population density and transnational travel of people and commodities increase the risk of communicable disease. As the threat of pandemics is becoming more real, it is paramount to create robust systems at the international, national and local levels to cope with such outbreaks. A recent global health commission estimated the potential annual economic losses from pandemics to be $60bn. Despite this ominous threat, international efforts to mitigate the risks are woefully inadequate. Read more

Capacity utilisation (CU%) in the chemical industry has long been the best leading indicator for the global economy. The IMF’s recent downward revision of its global GDP forecast is further confirmation of the CU%’s predictive power. As the first chart shows, the CU% went into a renewed decline last October, negating hopes that output might have stabilised. March shows it at a new low for the cycle at just 80.1 per cent, according to American Chemistry Council (ACC) data. By comparison, the CU% averaged 91.3 per cent during the baby boomer-led economic supercycle from 1987 to 2008.

This ability to outperform conventional economic models is based on the industry’s long history and wide variety of end-uses. It touches almost every part of the global economy, enabling it to provide invaluable insight on an almost real-time basis along all the key value chains – covering upstream markets such as energy and commodities through to downstream end-users in the auto, housing and electronics sectors. Read more

Bitter experience in Europe tells us that trivialisations of painful historical events, especially if they come from leading political figures, can inspire thinking among electorates that eventually turns into self-fulfilling prophecies. That is exactly why numerous countries in western Europe have laws that prohibit and reprimand any trivialising comparisons with the heinous doings of the axis powers in the 1930s and 1940s that caused the loss of millions of lives and unspeakable suffering. So unspeakable, that most of our ancestors preferred not to share those experiences with their descendants to this very day…

That makes recent historical comparisons by two former mayors of London all the more serious and outright unacceptable to all those who were persecuted and sacrificed their lives in the past century and to those who were dedicated to building a new and “peaceful” European Union. The United Kingdom has been an integral and vital part of that process in the past century, including since it joined the EEC in 1973 and decided by referendum in 1975 to remain in the body that was originally formed in 1952 to secure peace on a continent soured by thousands of years of war. Read more

In 1987, when I was five months pregnant with my youngest child Uchechi, doctors told me they were concerned that his head was not growing fast enough. It was one of the most frightening moments of my life. I couldn’t bear it, the sense of powerlessness in being able to do nothing but wait. It took two long months of fortnightly sonograms before we were finally given the all clear. Although Uchechi was fine in the end, the terrifying experience will remain with us forever.

Today, nearly three decades later, my heart goes out to the hundreds of thousands of pregnant women in Zika-infested countries who are going through the same agonising experience of not knowing the fate of their unborn child, or even worse those with confirmed cases of microcephaly. As world leaders, policymakers and young people come together in Copenhagen this week to discuss health, rights and well-being of women and girls as part of this year’s Women Deliver global conference, this epidemic is a reminder that a gender gap exists in health as well as education, economics and politics. Read more

The travel industry has seen impressive growth in recent years as business travel recovers post-recession and rapidly growing middle classes from emerging markets have sparked an aviation boom. But despite the growth of low-cost mass-market travel, higher-yield premium and luxury trips are outpacing the market as a whole.

Our latest report, ‘Shaping the Future of Luxury Travel’, which is underpinned by data modeling from Tourism Economics, found that luxury travel had a global growth rate of 4.5 per cent between 2011 and 2015, 0.3 percentage points higher than the overall industry. Over the next decade, luxury travel’s growth rate is forecast to accelerate to 6.2 per cent, compared with a (still healthy) 4.8 per cent for the overall market. Read more

The debate on the future of Europe and Britain within it is heating up. This week, Boris Johnson highlighted the problems with “EU foreign policy-making on the hoof”, suggesting that it had contributed to the protracted conflict in Ukraine. He was quickly branded a “Putin apologist” by adversaries.

None of Boris’s critics seem to have noticed that this is a clear case of shooting the messenger. What Boris has done is raise a legitimate concern. He is giving Europe a long-overdue reminder that in order to survive, it needs to get stronger. Read more

Last December, as part of their contribution to the Paris climate talks, a coalition of African governments and the African Union set a hugely ambitious goal to deploy 300 gigawatts of renewable energy by 2030.

That’s roughly the equivalent of Japan’s entire electricity capacity and nearly a third of that of the US, in a continent where hundreds of millions of people currently lack access to power. It will require an average annual deployment rate of 17 GW. Sub-Saharan Africa’s biggest annual deployment to date has been 2.6 GW. So, the 2030 goal means increasing yearly net capacity additions by a whopping 650 per cent. Read more

From Africa to the Far East, countries aiming to recover assets embezzled by former leaders and officials are facing a raft of challenges.

Nigeria’s President Muhammadu Buhari , attending an anti-corruption conference in London today, waved aside any call for an apology over UK prime minister David Cameron’s “fantastically corrupt” remark. Instead, he asked for help in recovering funds held in the UK. He summed up the challenge thus: “Unfortunately, repatriating stolen assets is tedious, time-consuming [and] costly. It entails more than just signing of bilateral agreements.” Read more

Women and girls bear the brunt of the world’s disease burden because, in too many places, they don’t have the tools—or the rights—to protect their own health.

We know that healthy women and girls create measurably healthier and more productive communities. A recent analysis by the McKinsey Global Institute estimates that advancing gender equality could add $12tn to global GDP by 2025. That’s $12tn with a “t.”

When 10 per cent more girls are healthy enough to go to school, a country’s GDP increases by about 3 per cent. Healthy girls and women learn more, earn more, produce more, and raise healthier children. Read more

By Mouayed Makhlouf , International Finance Corporation

For years, the Middle East and North Africa has been grappling with conflict, widespread unemployment, and civil unrest. Today, governments across the region face the additional challenges of an unprecedented refugee influx, inadequate infrastructure after years of neglect, and lukewarm investor sentiment. With all of this, should closing gender gaps be a priority in the region?

A growing body of evidence makes a strong business case for saying “yes” and ensuring that women are fully integrated into the economy. A report from the International Monetary Fund (IMF) found that if Egypt leveled the economic playing field, for example, it could boost its GDP by 34 per cent. Read more

Members of the board of governors of the European Bank for Reconstruction and Development will choose the bank’s next president on May 11. It has been clear for some time that they will re-elect the current one – Sir Suma Chakrabarti – despite a heavyweight challenger in the form of Marek Belka, the governor of Poland’s central bank. For this reason, this election is generating less excitement than the previous one when five candidates (myself included) squared off in one of the more open races for the helm of a multilateral institution.

Truth be told, Sir Suma and his team have done a good job under demanding circumstances. In addition to the global economic slowdown and related woes with non-performing loans, the EBRD has had to deal with many specific challenges: the start up of its operations in Arab Spring countries, a supposedly temporary expansion of its mandate to Greece and Cyprus, and significant retrenchment from Central and Eastern Europe by western banks. Last but not least, the Ukraine-related decision of a majority of its shareholders to stop new projects in its biggest and most profitable market, Russia, required deft redeployment of financial and human resources. Thankfully, the EBRD has come out of this turbulent period with a rare AAA rating, a comfortable capital cushion and recovering profitability on an expanded portfolio. Read more

In 2009, Bassirou Bonfoh, director of the Centre Suisse de Recherches Scientifique (CSRS) in Cote d’Ivoire joined forces with 10 other African institutions to collaborate on research into infections that pass between animals and humans, many of which are now sadly world famous including Ebola, HIV and Zika.

The collaboration enabled him to access data from as far afield as Tanzania and extend his remit to rift valley fever, an infection that has had several outbreaks since its first detection in 1931. Read more

By Tomás Guerrero, IE Business School

Nearly all muslim-majority countries currently import much of the food they consume, with imports, as in the case of the Gulf Cooperation Council (GCC) countries, above 70 per cent.

Thus they are net importers of food, and the vast majority of it is halal. In 2013, Muslims spent $1.2tn on food and drink, the equivalent of 17.7 per cent of total world expenditure on food in that year. Of this, $1tn was spent on halal food by the muslim communities in the 57 member countries of the Organisation of Islamic Cooperation.

There are three main factors explaining this dependency: adverse climate, the lack of the knowhow and technology needed in order to boost food productivity and the rapid growth of populations with increased disposable income who are starting to adopt Western patterns of consumption. Read more

Twenty years ago, I was told that emerging market shares were like mining stocks. This sounded an unglamorous if not outright demeaning description for one of the greatest growth stories the world was yet to see. But as the fortunes of emerging markets subsequently rose and fell in tandem with commodities, this adage rang more and more true. Two decades of data demonstrate convincingly that, despite their perceived long-term growth attractions, the performance of emerging assets depends primarily on the business cycle.

Every cycle reaches an extreme on the way up and on the way down. Persistent trends create their own mythology and investment fashions. The massive distortion of the financial markets by developed-market central bank intervention caused the long under-performance of value globally. To buy cheap assets is seen as horribly outmoded. Emerging markets are, therefore, “cheap for a reason”. Read more

By Jon Harrison and Trey McArver of Trusted Sources

The prospects for structural economic reform in developing Asian nations is being significantly constrained by the problems political leaders are experiencing in implementing their agendas. Conversations over the past month with policymakers and analysts in China, India, Indonesia, the Philippines and Thailand have brought out common themes on the progress towards sustainable growth and structural improvement.

Governments across the region have had mixed success in boosting growth. All five countries have seen growth decline to levels below that of 2010. External factors have been a major driver of the economic slowdown but domestic conditions have played a part as well. China is slowing due to unavoidable economic rebalancing and is likely to remain a major drag on regional economies for at least the next two years. Read more