WASHINGTON: As many as 115 million people could be pushed into extreme poverty this year due to the economic downturn caused by the coronavirus pandemic, the World Bank warned Wednesday.
That is a devastating reversal after decades of progress, and higher than the bank previously estimated, even as recently as August, when the worst case was put at 100 million.
And the bank’s new report estimates that by 2021, 150 million could be living below the extreme poverty threshold of less than $1.90 a day.
“The pandemic and global recession may cause over 1.4 percent of the world’s population to fall into extreme poverty,” World Bank President David Malpass said in a statement.
If the pandemic had not struck, the global extreme poverty rate was expected to fall to 7.9 percent, but now could climb as high as 9.4 percent, the bank said in its flagship report.
World Bank economists say the dire estimates for new victims of poverty this year, which range from 88 million to 115 million, depend on the outlook for the global economy, which the Washington-based crisis lender estimates range from a contraction of five percent to eight percent in the worst case scenario.
That would erode years of success in reducing extreme poverty, and the authors warn create “poverty hotspots” in areas that face a double-hit from economic crisis and conflict: more than 40 percent of the poor live in conflict-affected areas.
The research also finds a rising share of those living in extreme poverty are in urban areas, which threatens to overwhelm existing support programs that are designed for rural populations.
Instead of achieving the goal of eradicating poverty by 2030, the convergence of the COVID-19 pandemic with the pressures of conflict and climate change will put the goal “beyond reach without swift, significant and substantial policy action,” the World Bank said, warning that the global poverty rate could be about seven percent in the next decade.
“In order to reverse this serious setback to development progress and poverty reduction, countries will need to prepare for a different economy post-COVID, by allowing capital, labor, skills, and innovation to move into new businesses and sectors,” Malpass said.
The bank said the policy response must be commensurate with the severity of the crisis, including modernizing education and online learning and deploying new technology to expand the reach of social protection programs.
“Failure to act comprehensively and urgently will create even bigger challenges in the future,” the authors warned.
Looking at a broader definition of poverty, the report found that close to a quarter of the world’s population lives below the $3.20 line and more than 40 percent — almost 3.3 billion people — live below the $5.50 line.
Sub-Saharan Africa remains the epicenter of the problem, and could see an additional 40 million people fall into extreme poverty this year, and move closer to 500 million next year, according to the report.
And climate change will drive 68 million to 135 million into poverty by 2030, with Sub-Saharan Africa again the most vulnerable.
Latin America could see an increase of five million in the worst case scenario, and East Asia an additional nine million. The report does not include estimates for South Asia given the lack of data from India.
Pandemic could push 115 mn into extreme poverty in 2020: World Bank
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Pandemic could push 115 mn into extreme poverty in 2020: World Bank
- This is higher than the bank previously estimated, even as recently as August, when the worst case was put at 100 million
Saudi, US business ties set to reach new heights after high-level meeting
RIYADH: Trade relations between Saudi Arabia and the US are set to further prosper after a senior official from the Kingdom met with prominent business leaders.
Minister of Commerce Majid bin Abdullah Al-Qasabi held talks with representatives from the US Chamber of Commerce and prominent American companies in Washington, in which the robust economic connections between the two countries were emphasized.
Speaking to attendees, Al-Qasabi, who also serves as chairman of the board of directors of the National Competitiveness Center, highlighted the progress made so far in the Kingdom’s journey to achieve its ambitious plan for 2030, as reported by the Saudi Press Agency.
Al-Qasabi noted the transformations within the Saudi economy have spurred the emergence of new sectors and promising business opportunities.
Saudi Arabia fastest-growing IT market in region, ICT spending to hit $37.5bn in 2024
RIYADH: Saudi Arabia is the fastest-growing information technology market in the Middle East, Turkey, and the African region, with double-digit growth in technology spending, according to analysts.
Jyoti Lalchandani, regional managing director of research firm IDC, said wider information and communication technology market spending is expected to reach $37.5 billion by the end of 2024.
The comments were made during the ICT Indicators Forum, which was hosted by the Ministry of Communication and Information Technology alongside the Communications, Space, and Technology Commission in Riyadh on April 24.
It was further noted that spending in this area across the Saudi government sector would exceed $752 million by the end of 2024 as innovative technologies become foundational to building an “experience economy.”
“AI, big data analytics, IoT, and cybersecurity spending is poised for tremendous growth and will account for almost one-third of overall IT spending in Saudi Arabia in 2024. Spending on AI in Saudi Arabia will surpass $720 million in 2024, reaching $1.9 billion by 2027 at a CAGR (compound annual growth rate) of 40 percent—half of that will be on interpretative AI,” Lalchandani said.
“We have seen Saudi Arabia emerge as a hub for the cloud,” he added, with spending on public cloud forecasted to surpass $2.4 billion in 2024 and reach $4.7 billion by 2027.
Software-as-a-Service will account for more than 50 percent of the 2024 spending.
IDP further highlighted that spending on cybersecurity alone will surpass the $1 billion mark in 2024 and reach $1.6 billion in 2027.
“I do remember a few years ago, the cybersecurity market was estimated at about $500 million. Today, we’re talking about literally double that. We’re talking about $1 billion in the cybersecurity industry, and to hear it be called the fastest growing market in the region is really a testament to our beloved nation,” Salman Faqeeh, CEO of Cisco Saudi Arabia, said while speaking on a panel during the forum.
GCC oil companies can maintain solid credit metrics in net-zero journey: S&P Global
RIYADH: National oil companies in Gulf Cooperation Council countries could absorb the additional investments needed to transition toward net-zero while maintaining robust credit metrics, said S&P Global.
In its latest report, the credit rating agency noted that NOCs in the GCC face similar energy transition risks as their global counterparts, but their strong financial positions will help mitigate these impacts.
Rawan Oueidat, credit analyst at S&P Global Ratings, said: “We expect that GCC NOCs will have sufficient financial buffers and competitive advantages to absorb the incremental investments that are necessary to catch up with global peers and that they can preserve their credit ratios over the next five years.”
He added: “GCC NOCs’ average low-carbon investments would have to total $15 billion-$25 billion annually at least until 2026 to keep up with those of global listed peers. Even after factoring in these investments, the overall effect on NOCs’ debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) would be below 2.0x on average.”
According to the report, these firms can fund most of their net zero projects without having to revert to external financing sources.
S&P Global added that both banks and capital markets will play a role in funding the regional countries’ energy transition.
“Given the size of the GCC banking systems and their capitalization, we expect they will have the capacity to cater for the funding needs of the NOCs’ low-carbon investments over the next few years if necessary,” stated the agency.
It added: “However, we observe that NOCs, which are generally among the largest and internally-focused corporates in the GCC countries, are typically financed outside the local banking systems.”
The report highlighted that while firms in the region benefit from strong balance sheets, they will need to carefully consider investment requirements in relation to dividend distributions.
It further noted that the majority of NOCs in the GCC have already established net-zero targets, with Saudi Aramco aiming to achieve this by 2050 and Abu Dhabi National Oil Co. targeting a goal by 2045.
S&P Global further noted that environmental, social, and governance disclosures among oil firms in the region have increased, particularly in disclosing scope 2 emissions, but still lag behind their global counterparts.
However, the report highlighted that most NOCs in the GCC have not yet disclosed scope 3 emissions.
Scope 2 refers to emissions released into the atmosphere from the use of purchased energy.
On the other hand, scope 3 encompasses indirect emissions in a company’s value chain, and it is generally considered complex and challenging to report.
GCC logistics sector set to expand as Saudi Cabinet approves regional transport law
RIYADH: The logistics sector across the Gulf Cooperation Council region is set to prosper following the Saudi Cabinet’s approval of a land transport law within the region.
Chaired by King Salman, a ministerial session was held in Jeddah, during which the Cabinet reached consensus on several key proposals. Among these was the endorsement of the unified law.
The system is crafted to enhance the organizational environment, simplify procedures, and foster unity. Moreover, it aims to boost road safety, elevate service quality, protect investments, and stimulate growth in the logistics sector throughout the GCC region.
Global airline body calls for release of $720 million in held revenues by Pakistan, Bangladesh
- IATA asks Pakistan in a statement to simplify the ‘onerous’ repatriation process causing ‘unnecessary delays’
- The international organization says airlines are unable to repatriate $399 million from the Pakistani market alone
KARACHI: The International Air Transport Association (IATA) on Wednesday asked Pakistan and Bangladesh to release airline revenues amounting to $720 million, saying the two countries were holding it in contravention of international agreements.
IATA, an international organization representing the global airline industry, asked Pakistan to simplify the “onerous” repatriation process involving audit and tax exemption certificates in a statement, pointing out such procedures caused “unnecessary delays.”
Bangladesh, it said, had a more standardized system, though aviation needed to be a higher central bank priority to facilitate access to foreign exchange.
“The situation has become severe with airlines unable to repatriate over $720 million ($399 million in Pakistan and $323 million in Bangladesh) of revenues earned in these markets,” the statement informed.
IATA’s regional vice president for Asia-Pacific Philip Goh emphasized that the timely repatriation of revenues to different countries was critical for payment of dollar denominated expenses such as lease agreements, spare parts, overflight fees and fuel.
“Delaying repatriation contravenes international obligations written into bilateral agreements and increases exchange rate risks for airlines,” he said. “Pakistan and Bangladesh must release the more than $720 million that they are blocking with immediate effect so that airlines can continue to efficiently provide the air connectivity on which both these economies rely.”
Goh maintained that his organization recognized the two governments were facing difficult challenges, making it necessary for them to determine how to utilize foreign currencies strategically.
“Airlines operate on razor-thin margins,” he continued. “They need to prioritize the markets they serve based on the confidence they have in being able to pay their expenses with revenues that are remitted in a timely and efficient fashion.”
He pointed out reduced air connectivity limited the potential for economic growth, foreign investment and exports, adding such large sums of money involved in the Pakistani and Bangladeshi markets necessitated urgent solutions.
