tralac Daily News
Scrap chicken tariffs, meat trade body urges as prices jump 17% in one year - more rises expected (Business Insider South Africa)
The price of chicken, which has already seen a jump of 17% over one year, will become more unaffordable if trade tariffs aren’t scrapped, the South African Association of Meat Importers and Exporters (AMIE) has said. The association is calling on the South African government to purge all trade tariffs on chicken products and place a three-year moratorium on all new tariffs to ensure consumers can still afford chicken. The association, which represents meat and poultry exporters and importers, also calls for VAT on chicken to be removed. If trade tariffs alone are removed, consumers stand to save about 33% on bone-in products and between 18-20% on chicken offal products, Paul Matthew, CEO at AMIE, said. “South Africans are under extreme financial pressure. As a country, we have to do everything possible to arrest poultry price increases, and the quickest and most effective way to do this is for the government to give the South African consumers relief by placing a three-year moratorium on imported poultry tariffs and the removal of VAT on poultry products,” said Matthew.
ActionAid writes to ED over food prices (NewsDay)
ACTIONAid Zimbabwe has written to President Emmerson Mnangagwa demanding a solution to the skyrocketing food prices. The non-governmental organisation, with branches across Africa, also wrote to all African Union members saying that increasing prices had a disproportionate impact on people living in poverty. “The war in Ukraine seriously disrupted the food supply chain. African countries are major trading partners with Russia and Ukraine for supplies of wheat, edible oil, and fertilizer. Half of the grains distributed by the World Food Programme through its food support programmes come from Ukraine and Russia,” part of the letter dated April 15 and addressed to Mnangagwa read. “The rising price of food has a disproportionate impact on people living in poverty, particularly women and children. The negative effects of the rising food crisis are exacerbated in humanitarian crises, such as the worsening climate-induced drought in the Horn of Africa, where over 14 million people are facing severe hunger and water shortages.”
Rwanda’s cross-border markets boost trade (Trade for Development News)
At some border points, as many as 40,000 people cross daily but this cross-border trade has for long been largely informal, unregulated, and insecure, particularly for female traders. In 2018 the Government of Rwanda, with support from partners, began building new cross border markets to make it easier for traders to do business across the border. Under the Inclusive Cross Border Trade Capacity Development Project, two modern cross border markets were developed in Karongi on the border with DRC, and in Butera District, bordering Uganda. The work involved establishing a national cross-border market framework to support the implementation of Rwanda’s cross-border trade strategy to grow two-way trade, and to set up management structures, regulations, operational guidelines and processes. In addition, market infrastructure to support cross-border trade was upgraded, including by providing sheds with stands for fresh produce, and setting up of livestock yards.
Cold rooms were set up to store milk, meat and other perishable commodities, shops and stalls were built to display dry commodities with longer shelf-lives, as were storage warehouses. In addition, transport and logistics contractors were signed up to streamline routes-to-market. The coronavirus pandemic inevitably disrupted trade, including by causing the closure of the border as governments limited movements to stem the spread of the disease. Plans to build cold-storage facilities at Karongi were put on hold and the warehouses are operating at quarter-capacity. However, positive results are beginning to show as movement restrictions are lifted.
Manufacturers blame fuel crisis on subsidy scheme (Business Daily)
Manufacturers have called on the government to abandon the fuel subsidy scheme in a bid to enable normal supplies of the precious commodity and avoid economic disruptions. Industry lobby, Kenya Association of Manufacturers (KAM), said the State should discontinue the stabilisation of pump prices and allow the global market forces to apply locally. “It is now painfully clear that the fuel supply system, and in particular the subsidy programme, has broken down, perhaps irretrievably so. “We are urging the government to abandon the subsidy system to enable stable supplies in the market,” KAM chairperson Mucai Kunyiha said. KAM’s push for the removal of the subsidy comes days after Energy and Petroleum Cabinet Secretary Monicah Juma said Kenya would continue subsidising prices until the global costs of crude ease. The government has been struggling to fully compensate marketers for keeping prices low despite the global rally in crude prices.
Kenya, Uganda traders sign deal to end barriers (The East African)
Kenyan and Ugandan traders have signed a memorandum of understanding to help end continual tiffs on non-tariff regulations. In a joint communique, the two sides pledged to harmonise policies on agriculture to reduce delays and cut down on bureaucracies in doing business. “The signing of this memorandum today will enhance agricultural trade between Uganda and Kenya, improve interdependence of agro-based industries in the two countries.
The document will advance and actualise the resolutions arrived during September 2021 at a trade symposium in Mombasa,” read the joint communique.
The business associations, seen as the most affected by the non-tariff barriers (NTBs), say having common standards of safety, sanitation and the list of documentations would help reduce unnecessary delays. The traders intend to file their proposals with respective export departments for agreeable standards.
Prices increase as farmers hoard 85 percent of maize (Business Daily)
Farmers are holding onto 85 percent of the total stock of maize in the country, starving grain millers of supplies. The supply of maize in the market has been low since the beginning of the year as farmers hoard their crop in anticipation of higher prices. The food balance sheet report from the Ministry of Agriculture indicates that growers are holding 8.5 million bags of maize stocks out of 10.1 million bags of 90Kgs, which has left millers facing a shortage of grain, subjecting consumers to high prices of flour. The report indicates that millers and traders are in possession of a paltry 1.5 million bags with the National Cereals and Produce Board (NCPB) holding zero grains. NCPB has been targeting to buy two million bags of maize from farmers.
The Russian government has absolved itself of any blame for the current challenges, bringing the global food value chain to its knees. According to the Russian Embassy in Ghana, the current hardship is a result of high demand and rising prices of food, raw materials, and transportation services as part of post-Covid-19 recovery. It argued that the current situation in the agricultural space is not a result of happenings within the last two months, but due to a steady trend of happenings on the global stage in the last two years.
Vice President Dr Bawumia while addressing Ghanaians on the state of the economy at the National TESCON Training and Orientation Conference on April 7, noted that aside from the Covid-19 pandemic, the Russia-Ukraine war is adversely affecting the Ghanaian economy. He noted that the prices of food supplies have shot up because the two countries that are exporters of commodities such as wheat, and grains, have withheld supply due to the crisis.
The Ministry of Trade and Export Development of the Republic of Tunisia organized on 15 April 2022 in Tunis a workshop to present stakeholders with its strategy for the implementation of the African Continental Free Trade Agreement (AfCFTA). The draft strategy identifies Tunisia’s comparative advantages, how the country can achieve its full trade potential within the context of the AfCFTA and accelerate its economic diversification.
An in-depth analysis of the structure of Tunisian trade that the country’s experts conducted with support from the Economic Commission for Africa, revealed significant potential markets for Tunisian exports to Africa in the agricultural, agri-food and industrial sectors (electrical industry, textiles and clothing). Promising countries of destination include Algeria, Morocco and Libya, as well as Ethiopia, Egypt, Senegal and Côte d’Ivoire.
Minister of State for International Cooperation Rania al-Mashat discussed Saturday with the World Bank representatives the framework of the strategic partnership between the country and the UN organization in the period from 2023 to 2027. Minister Mashat asserted that the articulation of the next framework comes in an intricate time, where the government vies for recovery from the economic impact of COVID-19 pandemic while reinforcing mechanisms of comprehensive and sustainable growth.
The minister said that Egypt is keen on acquiring help from the World Bank to stimulate growth in job creation by the private sector, bolster women empowerment, and improve the outcome of inclusion, human capital productivity, resilience in face of crises, governance, and regional integration.
The World Bank team presented in the meeting the stages of preparing the cooperation framework; recommendations of the diagnostic and methodological studies conducted by both the international entity and the government; and updates on the climate and development country report that is still under-progress but will be launched later in 2022.
That report is aimed at the identification of gaps, on the market, policy, and institutional levels, composing a challenge to Egypt’s endeavors to achieve transition into green economy.
Egypt’s exports to Malaysia hiked 35 percent during 2021, amounting to about $126.7 million, compared to about $94 million in 2020, according to the Minister of trade and Industry Nevine Gamea. Gamea elaborated that the most important items of exports include citrus, phosphates, chemical and mineral fertilizers and fruits. The minister added that Malaysian investments in Egypt amount to $60 million in 26 projects in the oil, gas, electricity, construction, contracting, trade, tourism and information technology sectors, pointing out that Egyptian investments in Malaysia have reached $20 million in the chemical and wood industries sector.
Government to aid rice importers (NewRepublicLiberia)
The Government of Liberia said it would not allow rice prices to be increased under its watch. The George Weah-led administration, which has its root in the fight against poverty and lifting citizens up, said they would do everything to ensure that rice remains stable on the market and affordable. AS a result of this, the government has decided to subsidize importers with an amount of US$12M. Subsidies to rice importers have been done by previous governments and removing them now will have a serious effect on the citizens.
A Technical Committee has been set up at the level of the Ministry of Commerce and Consumer Protection in July 2021 to look at the recommendations of the Competition Commission on the Pharmaceutical Sector and advise on the implementation of a regressive mark-up as advised by the World Health Organisation. This Committee will, at its next meeting, consider the proposals for regressive mark-up and make recommendations accordingly. The Minister of Labour, Human Resource Development and Training, Minister of Commerce and Consumer Protection, Mr Soodesh Satkam Callichurn, made this statement, today, at the National Assembly, in reply to a Private Notice Question pertaining to the present fixed mark-up regime regarding the price of medicines.
Speaking about authorising parallel imports of branded pharmaceutical products, the Minister pointed out that, in accordance with the Industrial Property Act 2019, branded products are intellectual property protected. Consequently, he observed, any person who wishes to import a branded product which is already protected will mandatorily need the express authorisation of the right holder.
African trade news
Regional economic growth slows amid new economic shocks (The New Times)
Sub-Saharan African will face an uphill task as the region struggles to recover from the 2020 recession induced by the Covid-19 pandemic, due to new economic growth challenges, compounded by the Russian invasion of Ukraine. The World Bank’s latest Africa’s Pulse, report estimates growth at 3.6 per cent in 2022, down from 4 percent in 2021 as the region continues to deal with new Covid-19 variants, global inflation, supply disruptions and climate shocks. Adding to the region’s growth challenges are rising global commodity prices, which are increasing at a faster pace since the onset of the conflict between Russia and the Ukraine.
“As African countries face continued uncertainty, supply disruptions and soaring food and fertilizer prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region. Amid limited fiscal space, policymakers must look to innovative solutions such as reducing or waving import duties on staple foods temporarily to provide relief to their citizens,” said Albert Zeufack, World Bank Chief Economist for the Africa.
Africa’s Pulse (World Bank)
The latest edition of Africa’s Pulse says growth recovery has slowed as the region faces new economic threats, including new COVID-19 (coronavirus) variants, global inflation, supply disruptions and climate shocks. These challenges are compounded by Russia’s invasion of Ukraine, which has led to increasing international prices on commodities, particularly food staples, fertilizers, oil and gas.
African Union Development Agency projections show that, while the share of people in Africa living in extreme poverty has not seen a great deal of downward movement over the last few decades (46 percent in the period 1996-2005 to a projected 35 percent in 2016-2025), progress is expected to be around the corner.
The next few decades promise to be ones of great progress for Africa as a whole. Mariam Saleh, Statista's Research Expert for North Africa, writes: "The continent's socio-demographics will experience a significant development, including considerable population growth. Moreover, improving health and social conditions will determine lower poverty levels as well as an increase in life expectancy." In addition, the source projects great improvements in educational attainment over the assessed period.
Innovative use of technology helping to solve challenges in Africa, says VP (The Guardian Nigeria)
Vice President Yemi Osinbajo has urged Africa to sustain innovative use of opportunities offered by the digital era. He said: “It is imperative that we keep the momentum going, so that the continent thrives, backstops innovation, creates wealth and contributes to overall global development. “I think, there is no question at all that with the right spirit of hard work and problem solving that we see all over the continent, the green shoots of technological innovation will transform the continent and impact positively on the rest of the world.” Osinbajo stated this in his remarks delivered virtually, on Saturday, at the Stanford Africa Business Forum, themed: ‘African Innovation Shaping the Global Future’, and hosted by the Stanford Business School.
“It is now well acknowledged that the tech sector in Africa holds a lot of promise. There are said to be almost 700 innovation hubs on the continent and venture capital funding continues to expand at a rapid pace. “This last frontier continent offers opportunities for using innovation to solve the huge deficits in financial inclusion, human capital development, access to electricity, clean energy, access to credit and payments processing.”
The COVID-19 crisis has exposed the fragility of global health systems and highlighted the need for countries to ensure a minimum level of supply security for health products. The pandemic revealed gaps in the provision of critical drugs and medicine and gave rise to damaging responses as countries started to impose bans on the export of certain key products. Africa is heavily reliant on imports: up to 70% of pharmaceutical products are imported. Local vaccine production capacities addresses less than 1% of the local demand in value. African governments—like many others worldwide—are now looking to develop their local pharmaceutical sectors to ensure supply security, make on the balance of payments, and create wealth more broadly.
The motivations to foster the development of a local pharmaceutical industry are almost always systematically a combination of all three rationales, justify the push for the industry’s possibilities, the optimal strategic path for the African continent should address simultaneously economic, public health, and strategic considerations, and focus on fostering the development of a sustainable African pharmaceutical industry by targeting primary diseases and market demand.
Two-month window for Kinshasa to align budget with EAC (The East African)
The Democratic Republic of Congo has only two months to align its budget with that of the East African Community following its formal entry. President Felix Tshisekedi is also expected to create a ministry — and appoint a minister — that will deal with the EAC matters. These are part of the requirements DRC is expected to put in place within the six-month period that the EAC has granted to DRC, to undertake internal and constitutional processes to ratify the EAC Treaty and submit to the EAC Secretary General.
“They have to quickly formalise membership in the various organs following the signing of the EAC Treaty of Accession last week in Nairobi,” said Johnson Weru, Principal Secretary, Ministry of Trade. “First of all they have to normalise their budget preparations and reading in readiness for the new financial year that begins on July 1, as per the requirements of the EAC budget,” said Mr Weru.
Business leaders have voiced their concern about skyrocketing air transport costs in the East African Community (EAC) region. They have called for a thorough review of aviation taxes, levies and charges so as to make them affordable to air transport users.
The East African Business Council (EABC), an apex body of the private sector associations, is spearheading appeals for urgent intervention. Deeply concerned by the exorbitant fares, taxes, fees and charges, the Arusha-based body will commission experts to work on the issue. They will scan through the regulations on aviation taxes, levies and charges on the cost of doing business in the EAC. High air transport cost in the EAC is blamed for frustrating aviation-dependent sectors such as tourism and export of fresh produce. Some business analysts have linked it to failure by the EAC partner states to liberalise their air transport systems.
Uncertainty reigns with the unpredictable course of the war in Ukraine and the scientific uncertainty about the evolutionary path of the virus that causes COVID-19. The economic recovery may be uneven as regional averages mask broad differences between countries. Oil producers may benefit from elevated energy prices along with higher vaccination rates for COVID-19, while fragile countries lag. Per capita GDP, which is a more accurate measure of people’s standard of living, barely exceeds pre-pandemic levels due to a lackluster performance for most countries in 2020-2021. If these forecasts materialize, 11 out of 17 MENA economies may not recover to pre-pandemic levels by the end of 2022.
During times of uncertainty, it is important to not be overconfident about the region’s growth prospects. Simply put, forecasting is most valuable when uncertainty reigns. As its title suggests, this edition looks specifically at the reliability of various economic forecasts over the past decade, including those provided by the World Bank, International Monetary Fund and the private sector. The researchers find that growth forecasts have over the past decade been overly optimistic and are often inaccurate due to a lack of timely and transparent data. In the current context of global and regional uncertainty, getting the most accurate forecasts possible is even more important.
The Eight (8th) meeting of the Technical Steering Committee (TSC) of the West Africa Competitiveness Programme (WACOMP) was held virtually on 7 April 2022. The WACOMP, which is financed by the European Union, aims to support several selected value chains at national and regional levels in order to promote structural transformation and better access to regional and international markets. The Programme, which is led by the ECOWAS Commission, with the support of the UEMOA Commission, has one (1) regional component and sixteen (16) national components being implemented in ECOWAS Member States and Mauritania.
On behalf of Mr. Mamadou TRAORE, Commissioner for Industry and Private Sector, and Mr. Tei KONZI, Commissioner for Trade, Customs and Free Movement, Mr. Kolawole SOFOLA, Acting Director for Trade stressed the importance of fostering greater synergy between the regional and national components, which together would enable the region to take advantage of market opportunities at regional, continental, and international levels.
EAC business leaders eye CHOGM opportunities (The New Times)
More than 300 regional business leaders are set to attend the Commonwealth Business Forum, one of the major side events during the Commonwealth Heads of Government Meeting (CHOGM) slated for June 21 to 23, in Kigali. John Bosco Kalisa, CEO of the East African Business Council (EABC), on Monday, April 18, told The New Times that the Council is “planning to lead about 300 business delegates during the Commonwealth Business Forum.”
“CHOGM brings together than 50 member states from both developed and emerging countries and that provides a solid platform to engage and conclude trade and investment deals. It also provides an opportunity to discuss a number of binding constrains that hinder trade flows and regional integration.”
New guidelines for scaling up investments for youth in agri-food systems in Africa (Kenya Broadcasting Corporation)
The Food and Agriculture Organization of the United Nations (FAO) and the African Union Commission (AUC) have launched new guidelines for scaling up investments for and with youth in agrifood systems in Africa, during the 32nd Session of the FAO Regional Conference for Africa (ARC32).
The Investment Guidelines for Youth in Agrifood Systems in Africa provides practical “how to” steps to develop youth-focused and youth-sensitive investment programmes that see youth as partners in rural development, throughout all phases of the investment programme cycle. The guidelines are for those involved in designing and implementing agrifood investment programmes: governments, financial and technical partners, the private sector, civil society, and young women and men themselves.
The Board of Directors of the African Development Bank has approved an equity investment of €9.8 million to support venture capital investments in African start-ups, from seed to growth stages. The investment will help Cathay-AfricInvest Innovation Fund meet its target of securing €110m to invest in over 20 early-stage ventures across sub-Saharan Africa. The Innovation Fund focuses on financial inclusion (financial tech and insurance tech), retail and logistics platforms targeting online and mobile consumers, healthcare technologies, and pay as you go, off-grid energy technologies.
The Board of Directors of the African Development Bank has approved the establishment of a €4 million Africa Circular Economy Facility to drive integration of the circular economy into African efforts to achieve nationally defined contribution (NDC) targets.
The Facility, a multi-donor trust fund, will operate over a period of 5-years and will receive an initial support of €4 million from the Government of Finland and the Nordic Development Fund. The board approval took place on 30 March 2022.
The circular economy is a model of production and consumption that involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. Under the Paris Agreement, NDCs embody efforts by each signatory to reduce national emissions and adapt to the impacts of climate change. All 54 African countries are members of the Paris Agreement.
Global economy news
We live in the world of polycrisis. The COVID-19 pandemic exacerbated global income inequality, both within and between countries, and set back economic progress by a decade or more. The war in Ukraine has triggered a sharp spike in energy prices and an alarming food security crisis. And all this occurs against the backdrop of climate change, the single biggest existential threat facing humanity. So, I would like to speak about the three separate but interrelated crises, the three Cs that have upended our lives — COVID, conflict, and climate — and how trade and the WTO can help tackle them.
It is important that we start by recognizing that disenchantment and dissatisfaction with multilateralism and globalization — and talk of decoupling — had been building for years, long before the pandemic or the war in Ukraine. Even though global integration and solidarity had led to decades of relative peace and prosperity, and lifted over 1 billion people out of poverty, many were left behind: poor countries, and poor- and lower-middle-class people in rich countries. Shifts in the global balance of economic and geopolitical power also bred anxiety and resentment.
For all the criticism of supply chains early in the pandemic, trade has been a vital part of our response: cross-border supply chains were essential for mass-producing and accessing COVID-19 vaccines and other medical supplies. Trade has also been an important driver of economic recovery. Global merchandise trade rebounded strongly after the lockdowns, and has been at record highs since early 2021. Global trade grew roughly twice as fast as economic output last year, making external demand a key driver of growth for developing economies where domestic demand had been slower to recover. Looking back a few decades, open global trade, anchored in multilateral trade rules, has been enormously beneficial for growth and development.
The United States, United Kingdom and the European Union are closing in on a compromise solution to calls for a global intellectual property (IP) waiver for COVID-19 vaccines at the World Trade Organization (WTO), but India is unhappy with the plan.
New Delhi is relieved that its proposal to make COVID-19 vaccine technology widely available across the world is not being stonewalled any longer, but stressed that the plan under discussion is tame and low-impact, people familiar with the development said. Nearly 19 months after India and South Africa’s proposal to temporarily suspend certain parts of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) so that vaccines and testing technology for COVID-19 could be easily shared, work on it has been painfully slow. Suspending parts of the agreement would allow countries to overcome legal challenges posed by patents to ensure the timely provisioning of affordable medical products.
In November 2020, only eight months after the World Health Organization (WHO) declared covid-19 a pandemic, the scientific community achieved the unimaginable: It delivered an effective vaccine against the new virus. Around the same time, several low- and middle-income countries, led by India and South Africa, began petitioning (pdf) the World Trade Organization (WTO), asking for a waiver of patents and intellectual property rights for all drugs, vaccines, diagnostics, and other technologies related to covid-19 for the duration of the pandemic. Western countries had already secured the rights to large volumes of vaccines that were yet to be made, and despite efforts such as Covax, countries in the so-called global south wanted to increase their covid-19 manufacturing capacity, and to produce diagnostics and therapeutics as needed, without having to pay pricey licensing fees to pharmaceutical companies. The research and development of covid-19 treatments had been heavily subsidized by governments, and pharma companies were guaranteed to profit from vaccines.
With the virus in all corners of the world, and an understanding that global herd immunity could help prevent variants from emerging and end the pandemic in the shortest possible timeframe, waiving the intellectual property protections granted within the WTO by the Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS, should have been a no-brainer. Instead, a year-and-a-half after it was proposed, there is still no consensus on the waiver—other than a tentative leaked compromise with a much narrower scope.
At a United Nations Security Council emergency meeting on Feb. 21, as Russia prepared for a full-scale invasion of Ukraine, Kenya’s U.N. Ambassador Martin Kimani affirmed that “we must complete our recovery from the embers of dead empires in a way that does not plunge us back into new forms of domination and oppression.” Praised around the globe, his speech led many to assume that, in the face of Russia’s invasion of Ukraine, African states would largely stand with Ukraine and the West, and against Russia. The assumptions were based not on moral conviction alone; many African countries receive substantial assistance from the United States and Europe, while others rely on both Ukrainian and Russian wheat and other agricultural commodities exports, which are disrupted by the conflict.
African leaders are divided with respect to the conflict between Russia and Ukraine, and their interests and relations with the United States and Russia
many African countries, including the biggest recipients of U.S. assistance, are unlikely to automatically take a strong stance against Russia. For instance, South Africa, the United States’ largest African trade partner, and recipient in 2020 of more than $1.1 billion of U.S. assistance, also has significant ties with Russia. President Cyril Ramaphosa explained his country’s abstention from the March 2 vote by saying “ the resolution did not foreground the call for meaningful engagement,” and he called for “dialogue between the parties.”
The war in Ukraine will put further pressure on grain-importing countries in Africa and Asia as a reduced number of vessels for delivering cargoes drives up shipping rates, according to the head of the International Chamber of Shipping (ICS).
Trade flows of grains are undergoing significant shifts, he said, and the distance that ships will have to travel to get shipments from the Americas to customers is further than voyages from the Black Sea. ”This will have repercussions for poorer countries in Africa, which can ill afford to pay huge amounts more for their grain,” Poulsson said.
“For the here and now, freight rates will stay high and may go a little higher,” said Poulsson, whose organisation represents shipowners and operators that cover about 80% of the world’s merchant trade. “But it will be volatile because things can change.”
Global economic prospects have been severely set back, largely because of Russia’s invasion of Ukraine. This crisis unfolds even as the global economy has not yet fully recovered from the pandemic. Even before the war, inflation in many countries had been rising due to supply-demand imbalances and policy support during the pandemic, prompting a tightening of monetary policy. The latest lockdowns in China could cause new bottlenecks in global supply chains.
In this context, beyond its immediate and tragic humanitarian impact, the war will slow economic growth and increase inflation. Overall economic risks have risen sharply, and policy tradeoffs have become even more challenging. Compared to our January forecast, we have revised our projection for global growth downwards to 3.6 percent in both 2022 and 2023. This reflects the direct impact of the war on Ukraine and sanctions on Russia, with both countries projected to experience steep contractions. This year’s growth outlook for the European Union has been revised downward by 1.1 percentage points due to the indirect effects of the war, making it the second largest contributor to the overall downward revision.
The pandemic has imposed huge costs. Many impediments to the global recovery remain, with growth prospects increasingly divergent and uncertain. GDP growth over the medium-term in many emerging market and developing economies (EMDEs) is projected to fall below pre-pandemic levels. Investing to spur recovery is highly constrained by limited fiscal space and rising debt vulnerabilities. Rising inflationary pressures, driven by spikes in food, energy and commodity prices, and pandemic and conflict-related disruptions in supply, international trade, and financial markets exacerbate output losses and inequality. Urgent global action is needed to prevent hunger and food crises among vulnerable countries and poorer households and avert financial distress in highly indebted EMDEs. Close attention to the impact of refugee flows and the internally displaced is needed. Strong multilateral cooperation is crucial to preserve multilateral rules-based trade, ensure food and energy security, protect financial stability, and sustain increased financing to developing economies.
IMF’s new lending facility to cushion member states from economic shocks (The East African)
The International Monetary Fund (IMF) has created a new lending facility to help build resilience of its member countries against economic shocks. The facility, dubbed ‘The Resilience and Sustainability Trust (RST)’, becomes a third pillar of the Fund’s lending toolkit after the General Resources Account and the Poverty Reduction and Growth Trust. It comes into effect on May 1 and aims to build a fund of at least $45 billion in resources to help build resilience against long-term risks to balance of payments stability amongst member countries. The facility seeks to provide policy support and affordable longer maturity financing of 20 years with a 10.5-year grace period.
Finance chiefs of the Group of 20 major economies will likely do little more than highlight the deep rift that has formed among member nations next week when the forum holds its first ministerial-level meeting since Russia’s invasion of Ukraine. G-20 members, including Russia and the United States, have a plethora of issues to negotiate if they hope to pull the world’s economy out of the COVID-19-induced doldrums and mitigate the impact of the Ukraine crisis.
“The G-20 has played a role in identifying global problems and raising awareness of them,” Atsushi Takeda, a chief economist of the Itochu Research Institute, said. “But this time, whether it can function is entirely dependent on who will be at the meeting.” The potential division among members, who represent 80 percent of the world’s gross domestic product, would serve as a significant setback at a time when coordinated efforts are vital to address emerging and ongoing challenges, economists say.
The world’s food system was under strain even before Russia invaded Ukraine. Now — compounded by the war’s effect on trade and a corresponding spike in global fuel prices — it faces two dangerous and intertwined crises. In the short term, Russia’s war on Ukraine increases the risk of extreme hunger for millions more people. The danger is particularly acute for low-income countries that depend on food imports. And countries such as Ethiopia and Yemen already are dealing with hunger fueled by conflict. Over the longer term, experts are concerned that the response to these problems could lead to further use of fossil fuels and an expansion of unsustainable agricultural practices. Continuing on this path, they say, could exacerbate the climate crisis and deepen poverty and food insecurity.