Threat of financial crisis has not gone away, WEF warns
Threat of financial crisis has not gone away, WEF warns
The WEF’s global competitiveness report — its annual ranking of the strength of 137 economies around the world — warns that 10 years on from the global financial crisis, “the prospects for a sustained economic recovery remain at risk due to a widespread failure on the part of leaders and policy-makers to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity.
“Levels of ‘soundness’ have yet to recover from the shock of 2007 and in some parts of the world are declining further. This is especially of concern given the important role the financial system will need to play in facilitating investment in innovation,” the WEF added.
The economies of the Middle East and North Africa improved their average performance in the first half of 2017, despite challenges mainly from the decline in energy prices. The most improved country in the region was Egypt, up 14 slots to 101 in the world.
“Low oil and gas prices are forcing the region to implement reforms to boost diversification, and heavy investments in digital and technological infrastructure have allowed major improvements in technological readiness. However, these have not yet led to an equally large turnaround in the region’s level of innovation,” the WEF said.
The UAE was again ranked top of the regional rankings, at 17th, down one slot from last year. Saudi Arabia was ranked 30th, also down one position.
Qatar fell by seven positions to 25th, though the WEF noted that the report was compiled before the economic effects of the economic sanctions introduced by some of its Gulf neighbors because of allegations of terrorism funding.
“The country will have to ensure better access to digital technologies for individuals and businesses, and further strengthen educational institutions,” the WEF said.
On Saudi Arabia, the report said: “The macroeconomic environment has improved slightly after the 2015 oil price shock, but financial market efficiency has deteriorated as interest rates increased in 2016 and credit growth slowed.
“The country has stable institutions, good-quality infrastructure, and the largest market in the Arab world. Saudi executives see restrictive labor regulations as their most problematic factor for doing business: The labor market is segmented among different population groups, and women remain largely excluded,” the WEF added.
Another concern is the lack of adequately educated workers. Although tertiary enrolment is strong at 63 percent, more efforts are needed to advance the quality of education and align it with economic needs, the report said.
The UAE “continues to lead the Arab World in terms of competitiveness, but it loses one place as other countries post even larger gains,” the WEF said.
“This improvement shows the resilience of the UAE economy, in part due to increased diversification, which is reflected in its stable macroeconomic environment and its ability to weather the double shock of lower oil and gas prices and reduced global trade,” the report added.
Although the International Monetary Fund (IMF) predicts gross domestic product (GDP) growth to drop to 1.3 percent this year, non-oil growth is expected to pick up, suggesting that the country’s diversification strategy is bearing fruit. To further increase its competitiveness, the UAE will have to speed up progress in terms of spreading the latest digital technologies and upgrading education.
For the ninth consecutive year, Switzerland — home of the WEF — was judged the most competitive economy in the world, narrowly ahead of the US and Singapore, which switched positions in second and third.
Another key finding of the report is that competitiveness is enhanced, not weakened, by combining degrees of flexibility within the labor force with adequate protection of workers’ rights.
“With vast numbers of jobs set to be disrupted as a result of automation and robotization, creating conditions that can withstand economic shock and support workers through transition periods will be vital,” the WEF said.
The data also suggests that the reason innovation often fails to ignite productivity is due to an imbalance between investments in technology and efforts to promote its adoption throughout the wider economy.
Klaus Schwab, WEF founder and executive chairman, said: “Global competitiveness will be more and more defined by the innovative capacity of a country. Talents will become increasingly more important than capital and therefore the world is moving from the age of capitalism into the age of talentism.”
Visa says over 5 million payments affected by June outage
LONDON: Payment systems giant Visa said Tuesday that a massive technical glitch earlier this month had affected 5.2 million card transactions, almost half of which were in Britain.
Visa, revealing the details in a letter to a British parliamentary committee that is probing the matter, said the “rare” disruption prevented many cardholders form making payments in Europe for 10 hours on Friday June 1.
And the company apologized “unreservedly” for the failure and outlined plans for a compensation scheme.
“Overall, for cards issued both in the UK and elsewhere ... 51.2 million Visa transactions were initiated and sent to Visa’s European systems for processing,” wrote Visa Europe chief executive Charlotte Hogg.
“Of these, 5.2 million failed to process correctly,” she added in the letter to Treasury Select Committee chair Nicky Morgan.
The outage was caused by a “very rare partial failure” of a switch in one of Visa’s data centers, Hogg added. It has since been fixed.
Visa said there were 27.6 million transactions made in the UK during the disruption, of which 2.4 million failed to process properly.
“At its peak, the disruption affected people in the midst of returning home from work, socializing in restaurants and pubs, and doing end-of-day shopping,” Hogg said in the letter published Tuesday.
“We take seriously our important role in supporting financial stability in the UK.
“A disruption to our processing that impacts consumers at any time is unacceptable, let alone during a busy Friday afternoon,” she added.
“We apologize again unreservedly to everyone who was affected by the incident,” Hogg said.
“Visa, together with our financial institution partners, has quickly implemented a compensation program for cardholders.”