IMF, World Bank warn of synchronized global slowdown
Robie de Guzman • November 21, 2019 • 666
Beijing, China – International organizations including the International Monetary Fund and the World Bank warned Thursday that the world is facing a synchronized economic slowdown stemming from factors such as trade tensions between China and the United States and resulting uncertainties.
At a press conference following Thursday’s 1+6 roundtable meeting in Beijing, which involved Chinese authorities and various international economic institutions, new IMF Managing Director Kristalina Georgieva said the estimated losses for the global economy due to the China-US trade war will amount to $700 billion by 2020, 0.8 percent of the world’s GDP.
“We should move from trade truce to trade peace,” she urged.
The Bulgarian said that global growth is projected at only 3 percent in 2019 — the slowest in a decade — and recalled that growth of 90 percent of the world’s GDP has slowed in the past year in contrast to two years ago when 75 percent of the global economy experienced an upswing.
According to Georgieva, the current situation — which could worsen depending on the outcome of the United Kingdom’s exit from the European Union — increases financial vulnerability and poses long-term challenges such as income inequality, demographic and regional disparities.
The IMF chief warned that these issues “will continue to weigh on growth unless they are quickly addressed.”
World Bank President David Malpass spoke in similar terms and called for efforts to resolve trade problems between Beijing and Washington to “avert a sharper slowdown.”
Also present at the meeting was Chinese Prime Minister Li Keqiang as well as representatives from the World Trade Organization, the International Labour Organization, the Organization for Economic Cooperation and Development and the Financial Stability Board.
The joint statement issued by all these parties at the end of the meeting reiterates support for multilateralism and international cooperation as the only method for solving problems arising between countries.
It also underlines the need to strengthen the resilience of the financial system and to fortify trading systems. EFE-EPA
MANILA, Philippines – The Philippine government has signed a $370-million loan agreement with the World Bank for a project that aims to speed up the process of the country’s program to redistribute land to farmer-beneficiaries, the Department of Finance (DOF) said.
In a statement issued on Monday, the DOF said the loan will be used to expedite the splitting of about 1.4 million hectares of land covered by the Comprehensive Agrarian Reform Program (CARP) and provide individual titles to these parcelized lots to some 750,000 farmer-beneficiaries.
Finance Secretary Carlos Dominguez III and Mr. Achim Fock, who was then the World Bank’s Acting Country Director for Brunei, Malaysia, Philippines, and Thailand, signed the loan agreement last July 14, the department said.
Dominguez said the project called Support to Parcelization of Lands for Individual Titling (SPLIT) of the Department of Agrarian Reform (DAR) will improve the bankability of farmers and enable them to access credit and government assistance.
“It will support our economic recovery program by intensifying assistance to farmers and making agrarian reform beneficiaries (ARBs) more resilient to the economic and social impacts of the COVID-19 (coronavirus disease 2019) pandemic,” Dominguez said.
Under the project, the collective certificate of land ownership awards (CCLOAs) will be divided into individual titles for some 750,000 ARBs to help fulfill the completion of the decades-old CARP.
The government has redistributed about 4.8 million hectares of land to some 2.8 million ARBs under the agrarian reform program, but only 53 percent were in the form of individual land titles.
The remaining 47 percent or about 2.5 million hectares are CCLOA titles that were issued to groups of ARBs in the 1990s as a temporary measure to fast-track the distribution of land to farmer-beneficiaries, the DOF said.
“Through the project, ARBs will be provided security of tenure by way of issuance of individual titles. If ARBs or members of their family fall ill, clear and valid documentation of their property will allow them to mortgage their land, sell, or pass it on to their family members through inheritance,” it added.
The total cost of the SPLIT Project is US$473.56 million, of which US$370 million will be funded by the World Bank, while the government will provide the counterpart financing for the balance of US$103.56 Million.
The loan deal carries a 29-year maturity period, inclusive of a grace period of 10-and-a-half years, the DOF said.
The International Monetary Fund (IMF) on Wednesday revised down its forecast for the global economy amid the mounting COVID-19 fallout, projecting a 4.9-percent contraction in 2020.
The latest projection is 1.9 percentage points below the World Economic Outlook (WEO) forecast released in April, indicating a grimmer economic outlook as the pandemic continues to ripple across the globe.
“Compared to our April World Economic Outlook forecast, we are now projecting a deeper recession in 2020 and a slower recovery in 2021,” IMF Chief Economist Gita Gopinath said in a virtual news conference, noting that these projections imply a cumulative loss to the global economy over two years of over 12 trillion U.S. dollars from the crisis.
“The downgrade from April reflects worse than anticipated outcomes in the first half of this year, an expectation of more persistent social distancing into the second half of this year, and damage to supply potential,” Gopinath told reporters.
Advanced economies are projected to contract 8 percent this year, 1.9 percentage points lower than the forecast in the April WEO.
The U.S. economy is expected to shrink 8 percent, the Euro Area is on track to contract 10.2 percent, and the Japanese economy could decline 5.8 percent.
Emerging markets and developing economies, meanwhile, are projected to shrink by 3 percent this year, 2 percentage points below the April WEO forecast, according to the updated report.
Brazil and Mexico are projected to contract by 9.1 and 10.5 percent respectively, while India’s economy could see a contraction of 4.5 percent. China is expected to grow by 1 percent, the only major economy that could see growth this year.
The latest report also showed that global growth is projected at 5.4 percent in 2021, which would leave 2021 gross domestic product (GDP) some 6.5 percentage points lower than in the pre-COVID-19 projections made in January 2020.
Warning that the crisis will also generate medium-term challenges, Gopinath said that public debt this year is projected to reach the highest level in recorded history in relation to GDP, in both advanced and emerging markets and developing economies.
“Countries will need sound fiscal frameworks for medium-term consolidation, through cutting back on wasteful spending, widening the tax base, minimizing tax avoidance, and greater progressivity in taxation in some countries,” she said.
The IMF chief economist noted that a high degree of uncertainty surrounds this forecast, with both upside and downside risks to the outlook. On the upside, better news on vaccines and treatments, as well as additional policy support, could lead to a quicker resumption of economic activity, she said.
On the downside, further waves of infections could reverse increased mobility and spending, and rapidly tighten financial conditions, triggering debt distress, she said, adding that geopolitical and trade tensions could damage fragile global relationships at a time when trade is projected to collapse by around 12 percent.
Noting that global cooperation is more than ever “so important” when dealing with a truly global crisis, Gopinath said that every effort should be made to resolve trade and technology tensions while improving the multilateral rules-based trading system. (Reuters)
MANILA – The Philippines’ ranking in the World Bank 2020 Ease of Doing Business report climbed 29 notches from the previous year, the multilateral lender said on Thursday.
Out of 190 economies included in the study, the Philippines ranked 95th from 124th after scoring 62.8, an improvement over its grade of 57.68 in the previous year.
In the World Bank Ease of Doing Business 2020 report, Manila significantly improved in three areas: dealing with construction permits, protecting minority investors and getting credit.
In other indicators, the Philippines ranked 32nd in getting electricity; 120th in registering property; 95th in paying taxes; 113th in trading across borders; 152nd in enforcing contracts; and 65th in resolving insolvency.
The World Bank said that starting a business in the Philippines became easier after it implemented reforms, including the abolition of the minimum capital requirement for domestic companies.
It also made dealing with construction permits easier by improving and streamlining the process for securing an occupancy certificate.
“The Philippines strengthened minority investor protections by requiring greater disclosure of transactions with interested parties and enhancing director liability for transactions with interested parties,” the multilateral lender said in its report.
Department of Finance (DOF) Secretary Carlos Dominguez III expressed confidence that the Philippines will further raise its ranking next year once a new law expanding the access of micro, small and medium enterprises (MSMEs) to lending facilities is fully implemented.
Dominguez said Republic Act 11057 or the Personal Property Security Act (PPSA) will help propel the Philippines to a higher ranking in the Doing Business 2021 report with the law’s implementing rules and regulations soon to take effect.
“With the PPSA in place, MSMEs can register their movable assets such as inventory with the Land Registration Authority (LRA) and use those assets as collateral in accessing formal sources of financing,” Dominguez said in a statement.
“This is among the reforms we are pursuing to further improve our business climate and empower small entrepreneurs,” he added.
In World Bank’s report, New Zealand remains the most business-friendly country in the world, followed by Singapore, Hong Kong. Korea and the United States were also among the top performers.
Other economies with the most notable improvements in business climates were Saudi Arabia, Togo, Jordan, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria.
“The Doing Business 2020 study shows that developing economies are catching up with developed economies in the ease of doing business,” World Bank Group President David Malpass said in a statement.
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