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IMF Executive Board Concludes 2023 Article IV Consultation with South Africa
South Africa’s strong economic recovery from the COVID-19 pandemic is petering out. Growth moderated from 4.9 percent in 2021 to 2.0 percent in 2022 as the country was buffeted by Russia’s war in Ukraine, global monetary policy tightening, severe floods, and an unprecedented domestic energy crisis. Inflation rose above the target band though inflation expectations remained anchored. The current account moved back into a deficit after a temporary commodity-price driven surplus.
Externally, downside risks stem from slower trading partners’ growth, especially in China, further weakening of commodity prices, the impact of the FATF grey listing on capital flows, and tighter global financial conditions. More persistent high global fuel and food prices could de-anchor inflation expectations, and further raise risk premia. Systemic financial instability in advanced economies could cause adverse spillovers. Deepening geo-economic fragmentation could lower medium-term growth outlook, including through lower trade and financial flows, technology diffusion, and a fracturing of the international monetary and financial systems. On the upside, external demand for coal and precious metals could remain strong, strengthening South Africa’s relative position in the EM asset class (Annex I).
Deeper regional trade integration would benefit South Africa. The African Continental Free Trade Area (AfCFTA) is a good opportunity for South Africa to build on its industrialized economy, exploit economies of scale, and improve productivity and growth.24 Efforts to remove trade barriers, especially non-tariff barriers, will help boost intra-regional trade and help develop regional supply chains. Industrial policies, where desirable, should address specific market failures to promote competition and exports in concerned industries and technological advancement.25 They should also avoid discriminatory contents that violate international trade rules or accentuate trade tensions.
South Africa has diversified commodity and export markets, which help mitigate global shocks. South Africa has diversified its export destinations, with 34 percent of its exports going to advanced economies, 30 percent to emerging and developing Asia and 23 percent to sub-Saharan Africa (Figure AI.3, Panel 4). The key export products are coal, iron, precious metals (such as gold, palladium, platinum, and rhodium), and manufacturing goods, including cars. This composition of trade has served the country well since, after Russia’s invasion of Ukraine, strong demand for and high prices of coal boosted the current account despite prices for precious metals coming down from the pandemic peaks.
SA’s GDP grows by 0.4% in first quarter (SAnews)
Statistics South Africa (Stats SA) announced on Tuesday that the country’s gross domestic product (GDP) grew by 0.4% in the first quarter of 2023. Data show that the manufacturing and finance industries were major drivers of growth on the supply side of the economy.
“The demand side was lifted by exports, with smaller positive contributions for household, government and investment spending,” Stats SA said in a statement. According to Stats SA, eight out of 10 industries recorded growth in the first three months of the year, with manufacturing and finance, real estate and business services the largest positive contributors. Manufacturing output increased by 1.5%, adding 0.2 of a percentage point to GDP growth.
“Air transport, transport support services and communications also witnessed stronger economic activity, contributing to the industry’s positive reading.”
“Exports increased by 4.1% in Q1:2023. The rise was largely influenced by increased trade in metals; vegetable products; prepared foodstuffs, beverages & tobacco, and machinery & electrical equipment,” said Stats SA.
Kenya’s Economy is Recovering from the Polycrisis, But Challenges Remain (World Bank)
With a GDP growth at 4.8 percent in 2022, economic performance softened after the strong rebound from the COVID-19 crisis at 7.5 percent in 2021. The growth rate, however, has remained in line with Kenya’s long-term growth trajectory, even though the economy faced challenging global financial conditions, fuel, and food price shocks coupled with the elections, and a historic drought that affected the economy, especially in the second half of 2022.
The growth momentum was driven by the service sector which contributed about 80 percent of the increase in total GDP. Financial services, tourism, and transport sectors performed especially strongly. According to the latest Kenya Economic Update (KEU), Kenya’s GDP growth outpaced that of Sub-Saharan Africa which is estimated to have grown at 3.6 percent in 2022.
Kenya’s medium-term growth outlook remains strong as the economy continues to recover from the multiple crises. GDP growth over the medium term is expected to remain at around 5 percent, broadly in line with the pre-pandemic trend and Kenya’s estimated potential GDP growth rate. Real per capita incomes are expected to grow at around 3 percent in the medium term, and poverty is expected to resume its pre-pandemic downward trend.
The outlook, however, is subject to elevated risks. External risks include weaker than anticipated growth in Europe, elevated global commodity prices that can increase Kenya’s import bill and increase the cost of reducing inflation, and further tightening of financial conditions in advanced economies. Domestic risks are mostly linked to spending pressures to reduce the high cost of living and a slowdown in tax efforts.
Kenya’s trade surplus with Africa hits record levels (Business Daily)
Kenya’s goods trade surplus with Africa reached record levels in the first three months of the year driven by the fastest growth in exports for 12 years and a first fall in expenditure on imports in three years, official data shows.
Traders sold goods worth Sh98.85 billion to African countries in the January-March 2023 period against an import bill of Sh61.72 billion, according to provisional data collated by the Central Bank of Kenya.Earnings from exports in the period were 23.33 percent higher than the previous year, the strongest growth since 2011, while imports fell 6.02 percent year-on-year from Sh65.67 billion in 2022.This resulted in a merchandise trade surplus of Sh37.14 billion for the review period, a 156.45 percent climb over the same period last year.
Services sector will create 85m jobs in Nigeria, others by 2030 – McKinsey (Businessday)
The services sector is projected to create at least 85 million net new jobs across Africa by 2030, a new report has said. The report, titled ‘Reimagining economic growth in Africa: Turning diversity into opportunity’ by McKinsey & Company, said Africa will be home to the world’s largest working-age population by 2040, and smart deployment of its labor force in highly productive jobs will spur economic growth.
“By 2030, the services sector on its current trajectory will create at least 85 million net new jobs across the continent, enough to absorb half of new labor market entrants in highly productivity work,” it said. It said the number of new services jobs would almost triple if Africa matched the productivity of Asia’s strongest services hub, which would add $1.4 trillion to the continent’s economy.
“Services have secured their place as the major driver of the continent’s economic output, contributing 56 percent in 2019 compared to 50 percent in 2000. The sector presents significant opportunities for African countries to boost economic output and job creation—but only if productivity improves,” it said.
TBS urges producers to use free standards verification services (IPPMedia)
TBS Northern Zone manager, Engineer Joseph Mwaipaja said made a call while briefing to journalists who visited the bureau’s pavilion at ongoing 10th TCCIA-Tanga Trade and Tourism Exhibition which is taking place at Mwahako grounds in Tanga city.
He said that, product classification is vital into devising a marketing strategy that helps to create effective customer - centric marketing strategies.
He explained that Tanga had recently became international trades gateway region after the government implement numerous strategic mega projects like improvement of Tanga Port and East Africa Crude Oil Pipeline(EACOP), by pointing out that the projects will be a game changer by bringing other entails opportunities by increasing high demands of goods henceforth those entrepreneurs issued with certificate standards will pave the way to them to have vast chances to compete and sell more in East African markets.
He further explained that according to available data, until end of July this year, about 30 producers and business people of Tanga region will be offered certificates of standards verification by TBS.
“These are great developments and give hopes and we TBS pledge to continue implementing programs of educating entrepreneurs on the importance of possess TBS verification certificates that will boost them to conduct their business competitively,” he said.
Morocco fruit & veg supply secured as court rules against trade lawsuit (The Grocer)
Supply of Moroccan fruit & veg has been safeguarded, as a legal suit against trade between the Northern African nation and the UK has been rejected.
Campaigners had taken the government to the High Court over a post-Brexit trade agreement with Morocco, arguing it was negotiated without the consent of people from the Western Sahara territory, a heavily disputed region of the country. But a judge has now permanently ruled that the case against the UK Morocco Association Agreement, a deal first concluded in 2019, cannot be further appealed.
The ruling has removed a potential risk of disruption to the import of Moroccan goods, which UK supermarkets heavily rely on.
Recent trade figures showed the UK imported more than £400m of fruit and vegetables from Morocco, making up a third of all imports from the African nation. Trade between the two countries grew almost 50% year on year to Q4 2022.
“We are now entering a new era of relations for the UK and Morocco that will drive prosperity to the benefit of all parties,” said Chakib Alj, president of Morocco’s leading business group, the General Confederation of Enterprises in Morocco (CGEM).
The Gambia’s Economy Shows Resilience Amid Global Challenges (World Bank)
The report highlights that the weak growth in the services sector, particularly in tourism, has restrained The Gambia’s economic progress. Although there was an increase in the number of tourist arrivals, it was not sufficient to offset the sluggish growth in other subsectors. Furthermore, trade disruptions and negative terms of trade have weighed on the economy, as the country is a net oil and commodity (food) importer and recorded negative terms of trade in 2022.
The Gambia’s economy has displayed remarkable resilience in the face of global economic challenges, according to the Third Gambia Economic Update. Despite a sluggish global environment, the country’s real GDP grew by 4.3 % in 2022, signaling a continued recovery from the impact of the COVID-19 pandemic.
Looking ahead, the economic outlook for The Gambia remains favorable, with GDP projected to grow by 5.5 % over the period of 2023-2025. Growth will be supported by increased economic activity across sectors, particularly in industry and services. However, risks such as a prolonged war in Ukraine, fiscal slippages, climate change, and political uncertainty pose downside risks to the country’s economic prospects, exacerbating existing structural constraints to the economy.
“It is crucial for the government to implement policies that accelerate financial inclusion, which will enhance access to financial services and support the country’s economic growth,” said Ephrem Niyongabo, World Bank Economist and Author of report
Libya’s Economy Shows Resilience and Potential for Prosperity Amid Challenges (World Bank)
Libya’s economy shows resilience despite facing low and volatile economic growth. The World Bank estimates a 1.2 percent contraction in Libya’s economy for 2022, primarily attributed to a decline in oil production during the first quarter of the year. High unemployment rates of 19.6 percent persist, with over 85 percent of the working population engaged in the public and informal sectors.
Libya’s challenging transition process has been affecting the economy and society; the country experienced a 50 percent decline in GDP per capita between 2011 and 2020. Absent the conflict, the economy could have witnessed, on the contrary, a high positive growth of 68 percent over the ten years growth, a possibility that remains attainable and highlights the country’s enormous potential.
Despite facing significant challenges, Libya has a high potential for economic reconstruction and diversification, backed by considerable financial resources. This potential resides on four pillars: i) achieving a sustainable political agreement for Libya’s future, ii) devising a shared vision for economic and social advancement, iii) creating a modern public financial management system for equitable wealth distribution and transparent fiscal policies, iv) and developing a comprehensive social policy that facilitates public administration reform and differentiates between social transfers and public wages. These elements will set the foundation for Libya’s prosperous future.
EAC states to charge 10 US dollars road toll (Tanzania Daily News)
The East African Community (EAC) member states have agreed to charge 10 US dollars per 100 kilometres as a road toll for cargo trucks to strengthen provision of customs services at the borders. The agreement was reached at the 42nd meeting of the Ministers of Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) held at the EAC Headquarters in Arusha at the weekend.
Speaking after the meeting, the Minister for Investment, Industry and Trade Dr Ashatu Kijaji and Minister for Finance and Planning, Dr Mwigulu Nchemba said the rate is for vehicles from one country to another within the community instead of each country having its own toll rates.
“We have agreed to charge 10 US dollars per 100 kilometres as roads user charges for cargo trucks to the member countries instead of each country charging its charges as well as strengthening the provision of customs services at the border of Kenya and Tanzania which will reduce congestion of trucks and stimulate business growth,” said Dr Kijaji.
In addition, the sectoral council agreed to abolish the cost of visas for their citizens who want to travel from one country to another (within EAC) for various activities including business to promote relations among the residents of the community as well as stimulate the growth of business and the economy of the respective country.
New push for households to have own grain reserves (The Standard)
Households should have their own grain reserves as one of the solutions to food insecurity, a regional private sector body has suggested. This would be in addition to the national strategic food reserve, where millers would buy grains when there is a shortage at subsidised prices.
The East African Business Council (EABC) in a report that analyses the effect of food inflation in the region, also wants East African Community (EAC) partner states to allow for emergency exports in times of shortage.
The Impact of Global Crises on Food Security in East African Community report looks into the member states’ cereal imports, exports, and affordability. It details interventions that if implemented can be of benefit to the countries.
The report released last month covers the seven EAC member states. It shows the gaps in the production value chain and calls for increased trade within the region to expand the capacity of farmers to produce more. It details the deficiencies in food security using food imports over total merchandise exports, particularly cereal dependency.
“In the EAC region, Burundi, Kenya, and Rwanda had the highest import dependencyratios,” the report says. “This could be due to their staple foods mainly being cereals, which are not adequately produced in their respective countries.” Uganda and Tanzania, on the other hand, seem to import less of the food, possibly because they are able to meet their local needs as cereals also constitute some of their staple foods.
greater regional trade integration and resilient transport infrastructure will enable sales of one country’s bumper harvests to its neighbours facing shortages. “Tariff reduction and regional alignment of agricultural and product market laws and regulations, especially with respect to water, seeds, and fertiliser will all be elemental,” the report adds. “Expansion of producer organisations can facilitate the adoption of new technologies, scale up food production and distribution, and support price stability.”
COMESA Summit and Business Forum to Focus on Economic Integration (263Chat)
The Common Market for East and Southern Africa (COMESA) will hold its 22nd Summit and a high-level Business Forum in Lusaka, Zambia, from June 6-8, 2023. The summit, held under the theme “Economic Integration for a Thriving COMESA Anchored on Green Investment, Value Addition and Tourism” will also see Zambia assume the leadership of the bloc.
In a statement, COMESA said the theme was motivated by the need to address the current regional and global economic and trade dynamics, including the effects of COVID-19, which especially affected tourism-dependent economies.
The summit will be preceded by the 16th COMESA Business Forum on June 7. The Business Forum will focus on engaging public and private stakeholders on solutions that will propel and transform COMESA into competitive and sustainable growing economies for regional and global trade and investment expansion post COVID-19.
AfCFTA’s promising future: Boosting African trade amidst obstacles (Business Insider Africa)
“Only a few hundred kilometers separate Lagos, Nigeria, from Accra in Ghana but for the thousands of traders who ply this route, the journey through these routes can take a full day. Customs officials and police at roadblocks will make you unload and unpack every little package in order to delay you for hours,” Lucia Quachey, the secretary-general of the African Federation of Women Entrepreneurs, stated.
She also pushed for the construction of infrastructure to facilitate commerce and for the removal of several tariffs and non-tariff obstacles.
Maersk (Maersk) today discussed and presented papers on ‘Logistics 4.0: Accelerating Africa’s Digital Revolution’ at a closed-door session with some of the top CEOs from Africa.
To participate in global trade, it is extremely important to be competitive at all levels – be it in terms of costs or ease of doing business. Several complexities in the African supply chains have limited the Logistics Performance Index for African countries in the past. However, a lot of these complexities can be overcome with the use of technology and digital solutions.
Digitalisation is crucial in reducing logistics cost and supply chain complexities, which will in turn improve the Logistics Performance Index in Africa. Enhanced visibility, streamlined procurement processes and data-driven decision-making will drive competitiveness in Africa’s logistics, said Darryl Judd, Regional Head for Integration and Business Growth, Maersk Indian Subcontinent, Middle East and Africa (IMEA)
Measuring informal cross-border trade is key to monitoring intra-African Trade (UNECA)
Despite its importance to the livelihoods of millions of Africans, informal trade is not well understood on the continent. As a result, the African Union Commission (AUC) with support from the Economic Commission for Africa (ECA) and the Afreximbank established a Task Force on developing a harmonized methodology for Informal Cross-Border Trade Data Collection.
Opening a two-day hybrid meeting to review and validate the Continental Methodology for Informal Cross-Border Trade Data Collection in Africa, Stephen Karingi, the Director of Regional Integration and Trade at the ECA said informal cross-border trade is a key feature of Africa’s trade landscape.
“Despite its significant contribution to the economy, ICBT remains largely undocumented,” Mr. Karingi said, noting that current efforts to collect data on ICBT within the continent, were largely fragmented and unsystematic.
“The challenges related to ICBT data collection notwithstanding, understanding the ICBT landscape is important for policy design as well as the development of the relevant initiatives targeted at the major trade corridors within our countries and regions,” Zambia Statistics Agency Interim Statistician General, Mulenga Musepa said, highlighting that National Statistical Offices need to conduct timely ICBT data collection which should be institutionalized at the country level to ensure its sustainability.
Value addition will rev up Africa’s economic growth (Business Daily)
Africa is home to abundant mineral resources, including 30 percent of the world’s reserves, such as oil, natural gas, gold, and valuable metals like chromium and platinum. The Continent also holds the largest reserves of cobalt globally, with the Democratic Republic of Congo (DRC) alone accounting for nearly half of the total global cobalt reserves of 8.3 million metric tonnes.
However, despite this resource abundance, Africa has predominantly relied on commodity production and exports, with limited value addition and weak linkages to other sectors of the economy. Without immediate action, Africa’s manufacturing industry is likely to remain small in the coming years.
African countries can leverage the African Continental Free Trade Area (AfCFTA) to boost value addition. AfCFTA, established in 2021, creates a single market for goods and services, allowing free movement across the continent. By eliminating tariff barriers and expanding market access, African countries can diversify their economies and enhance their value-addition capacity.
The success of the AfCFTA and EAC efforts depends on establishing a robust pan-African logistics framework that facilitates smooth cargo flow and boosts trade across the continent, as well as linking Africa’s value-added goods to global consumer markets.
Africa possesses significant mineral reserves, but its heavy reliance on commodity production and exports limits its value-addition potential. However, initiatives like the EAC and AfCFTA provide opportunities to promote industrialisation, diversify economies, and enhance value addition.
WTO Chief urges African governments to increase trade, agric investment (Citi Business News)
The Director-General of the World Trade Organization (WTO), Dr Ngozi Okonjo-Iweala, has called on African countries to create trading opportunities and increase investment in agriculture to address food security in Africa.
In a speech read on her behalf at the 8th Africa Agribusiness and Science Week (AASW8) in Durban, Dr Okonjo-Iweala noted that one-fifth of Africa’s population continues to face hunger despite being “a continent with the world’s largest reserved arable land.”
explained that various governments need to take steps “to reinforce the provision of public goods”. This can be done by “improving the availability of extension and advisory services, investing in research, promoting access to technology, science and innovation, and improving infrastructure in rural areas,” she noted.
Highlighting the need for trade integration through AfCFTA, she said that “trade can connect producers and consumers across the [African] continent and beyond. It can also help to improve agricultural productivity and create jobs in rural areas”.
Where does southern African sit in the global trade scenario? (Seatrade Maritime)
With about 90% of cargoes brought to Western Europe coming from the Far East (Asia), the need to reassure clients and end-users becomes ever more pressing as we navigate through a new era where global supply chains are challenged by unpredictability.
Whether caused by Covid-related lockdowns and congestion, or the ongoing conflict in Ukraine, supply chains are in need to diversification if they are to stay resilient against another potential shock in the future. The search for resilience has, therefore, led to several manufacturers to consider reshoring as a possibility – and in some cases, the term evolves to “friendly-shoring”. While transpacific trade has dominated the scene in recent decades, shipping lanes and supply chains connecting Europe and Asia are faced with more options, not just in terms of trade corridors but also for manufacturing, which places the African continent on the spotlight.
if the continent – and especially the southern African region – is to become an attractive production alternative for global supply chains, it needs to improve its port, inland and manufacturing infrastructure. Significant milestones have taken place in this regard, such as recent commission of 750,000 TEUs that Namports (Namibian Ports Authority) have commissioned for Walvis Way, to which TiL Group has been appointed, the Port of Maputo in Mozambique, where DP World operates, leading to the Maputo corridor, and the recent investment in port and railway networks across the region.
DP World partners Standard Bank to expand trade finance in Africa (African Review)
African companies looking for trade finance will now be able to seamlessly access working capital from Standard Bank via the DP World Trade Finance platform. DP World Trade Finance connects business with financial institutions as a fintech platform while also directly offering trade finance facilities on its own. It offers businesses a single window to access trade finance solutions.
Access to finance is one of the biggest barriers for businesses seeking global trade opportunities, evidenced by the struggle that many businesses face in securing the upfront funds required to move cargo. By bringing Standard Bank onto the platform, DP World Trade Finance now offers an array of financing solutions to African businesses, which face an ever-growing need for logistics and financial support to connect to global trade routes.
Afreximbank and Fiducia join forces to promote factoring and supply chain finance in Africa (Afreximbank)
In a move that is set to change the face of supply chain and SME financing in Africa, the African Export-Import Bank (Afreximbank) and the supply chain financing company, Fiducia, have entered into a Memorandum of Understanding (MoU) to promote factoring across the continent and help reduce the supply chain finance gap.
Mrs. Awani, the Afreximbank Executive Vice President, said that the partnership with Fiducia was another step forward in Afreximbank’s ongoing developmental initiative of promoting factoring across the African continent as a means to reduce the trade finance gap which was most acutely felt by SMEs.
“SMEs contribute the majority of economic output and employment generation in Africa. Greater access to bank financing will, therefore, enhance the growth of this vital segment. The involvement of emerging factors in the financing arrangement will also build factoring capacity across the continent in furtherance of Afreximbank’s vision of Transforming Africa’s Trade,” commented Mrs. Awani.
Blog: Sustainable Production and Trade – Perspectives from the Commonwealth (The Commonwealth)
International trade can be a driver of inclusive economic growth and a means to achieve the Sustainable Development Goals (SDGs). To promote sustainability across the economic, social and environmental dimensions, trade policies have been evolving at the domestic and international levels.
On the occasion of the second Commonwealth Trade Ministers Meeting on 5-6 June 2023, a new book by the Commonwealth Secretariat, Sustainable Production and Trade: Perspectives from the Commonwealth, examines sustainable production and trade practices and governance arrangements in four sectors: cocoa, fisheries, forestry, and textiles and garments. This blog explores some of the sustainability challenges in each sector and highlights measures to address these across the Commonwealth.
These sectors hold significant importance to Commonwealth members, as reflected in their average export share from 2019 to 2021: 16% for fisheries, about 20% for forestry, nearly 16% for cocoa, and 14.5% for textiles and garments. All four sectors are labour intensive, making them crucial to the economic growth and job creation in developing countries, particularly in least developed countries (LDCs) and small states. The importance of these sectors is also highlighted by their high trade reliance in various geographical regions of the Commonwealth
Moving fast with frontier technologies (UNCTAD)
In the last two decades, the use of frontier technologies such as artificial intelligence, the Internet of things and energy from renewable sources has undergone significant growth, and this trend is expected to continue. However, there is still considerable concentration in these markets.
The leading frontier technology providers are mostly firms from China, the United States of America and a few other developed countries, with little participation from developing countries. The same pattern is observed with regard to knowledge generation and trade.
Governments of developing countries should take proactive action to increase preparedness to use, adopt and adapt such technologies and to take up the economic opportunities linked to them. Some of the challenges associated with the adoption of new technologies in developing countries are addressed in this policy brief, and some policy recommendations are proposed.
Global economic outlook improving, albeit to a low growth recovery (OECD)
The global economy has begun to improve, but the recovery will be weak, according to the OECD’s latest Economic Outlook. The Economic Outlook projects a moderation of global GDP growth from 3.3% in 2022 to 2.7% in 2023, followed by a pick-up to 2.9% in 2024. Lower energy prices are easing the strain on household budgets, business and consumer sentiment are recovering, albeit from low levels, and the re-opening of China has provided a boost to global activity.
The Outlook lays out a series of policy recommendations, underlining that the need to lower inflation, adjust fiscal policy and promote sustainable growth entails significant challenges for policy makers.
Monetary policy should remain restrictive until there are clear signs that underlying inflationary pressures are durably reduced. Fiscal support, which has played a vital role in helping the global economy through the pandemic and the war in Ukraine, should be scaled back, becoming more targeted and calibrated toward future needs. Broad energy-related support should be withdrawn as energy prices fall and minimum wages and welfare benefits are being increased to take account of past inflation in many countries.
“Fiscal policy should prioritise productivity-enhancing public investments, including those driving the green transition and boosting labour supply and skills,” OECD Chief Economist Clare Lombardelli said. “Renewed reform efforts to reduce constraints in labour and product markets and to reignite private investment and productivity growth would improve sustainable living standards and strengthen the recovery from the current low growth outlook.”
The Outlook includes a special chapter dedicated to women’s economic empowerment, setting out policy recommendations, including on expanding flexible work arrangements, addressing tax and benefit disincentives and improving access to childcare. It highlights that removing structural barriers and discrimination to realise gender equality, must be a high priority to boost long-term economic well-being and prosperity.
Global Economy on Precarious Footing Amid High Interest Rates (World Bank)
Global growth to slow to 2.1% in 2023, with prospects clouded by financial risks, according to the World Bank’s latest Global Economic Prospects report.
“The world economy is in a precarious position,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President. “Outside of East and South Asia, it is a long way from the dynamism needed to eliminate poverty, counter climate change, and replenish human capital. In 2023, trade will grow at less than a third of its pace in the years before the pandemic. In emerging markets and developing economies, debt pressures are growing due to higher interest rates. Fiscal weaknesses have already tipped many low-income countries into debt distress. Meanwhile, the financing needs to achieve the sustainable development goals are far greater than even the most optimistic projections of private investment.”
“Many developing economies are struggling to cope with weak growth, persistently high inflation, and record debt levels. Yet new hazards—such as the possibility of more widespread spillovers from renewed financial stress in advanced economies—could make matters even worse for them,” said Ayhan Kose, Deputy Chief Economist of the World Bank Group. “Policy makers in these economies should act promptly to prevent financial contagion and reduce near-term domestic vulnerabilities.”
DG Okonjo-Iweala: E-commerce has emerged as major force in global economic output, trade (WTO)
The workshop provided an opportunity for WTO members to exchange views with international organisations on cross-cutting issues under the Work Programme identified by members in the past few months. In particular, the workshop looked at work carried out at the international level on consumer protection, the digital divide, the moratorium on imposing customs duties on electronic transmissions and legal, regulatory frameworks on e-commerce.
DG Okonjo-Iweala noted that members are engaging substantively on broad e-commerce-related issues with a development focus. “These discussions are important to better understand the challenges and opportunities of digital trade,” she said.
DG Okonjo-Iweala noted the dramatic growth in services delivered across borders via digital networks. The WTO estimates that global exports of digitally delivered services grew by 8.1% per year between 2005 and 2022, much higher than the 5.6% growth registered for goods exports.
The DG said: “In 2022, the value of exports of these services, which cover everything from streaming games to consulting services provided by video, reached USD 3.82 trillion — worth 12% of total goods and services trade, up from 8% a decade earlier. With the comparatively slow recovery of tourism and other services requiring cross-border movement of people, digitally delivered services have increased their footprint in global services trade. Last year represented 54% of total global services exports.”
Private sector shares views on trading goods in digital era, post-pandemic changes (WTO)
The event, moderated by Suja Rishikesh Mavroidis, Director of the Market Access Division, highlighted how the COVID-19 pandemic lockdowns compelled businesses and organisations to move many of their functions online and to accelerate their digital transformations. These included processes related to the movement of goods across borders and dealing with customs issues. Participants also looked at how this digital transformation has affected trade in goods and discussed whether trade has become as a result more efficient, safe and sustainable.
From a significant reliance upon paper and manual processes that slowed down trade during COVID-19, countries and companies transitioned to updated digital-based operating models to handle modern post-pandemic world trade. Further digitalizing process and incorporating modern technologies such as artificial intelligence (AI) machine learning will reduce risks in trade and will allow better targeting to reduce intentional and unintentional fraud. The reality is humans can no longer process the amount of data generated in international trade, said Mr John Bescec, Director of Customs and Trade Affairs at Microsoft and Chair of the Global Customs and Trade Facilitation Commission at the ICC.
