WEF: Economists warn of deepening human misery amid global economic fragmentation 

Special WEF: Economists warn of deepening human misery amid global economic fragmentation 
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Moscow's war of aggression has disrupted grain production in Ukraine but also the supply line from Russia's vast wheat fields. (Shutterstock)
Special WEF: Economists warn of deepening human misery amid global economic fragmentation 
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Protesters take part in a demonstration during the annual World Economic Forum (WEF) meeting in Davos, Switzerland, on May 22, 2022. (AFP)
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Updated 24 May 2022

WEF: Economists warn of deepening human misery amid global economic fragmentation 

WEF: Economists warn of deepening human misery amid global economic fragmentation 
  • Experts warn the pandemic and war in Ukraine have exacerbated the trend towards “deglobalization” 
  • Chief Economists Outlook forecast warns inflation and supply chain disruption will deepen food insecurity 

DUBAI: The World Economic Forum’s Chief Economists Outlook report has warned of potentially dire human consequences that could result from the fragmentation of the global economy, exacerbated by the effects of the COVID-19 pandemic and the war in Ukraine.

In their latest quarterly report, published on Monday, day two of the WEF annual meeting in Davos, Switzerland, experts forecast higher rates of inflation in the US, Europe and Latin America, with a resultant decline in real wages in both high-income and low-income countries.

The regions that appear particularly vulnerable to a lower rate of economic activity include the Middle East and North Africa, sub-Saharan Africa and South Asia, which have already experienced worsening levels of food insecurity in recent years.

As supply chains enter a third year of disruption, governments and businesses are rethinking their approach to exposure, self-sufficiency and security. As a result, experts warn that firms are realigning their supply chains along geopolitical fault lines, creating a new “economic iron curtain.”

Economists fear these trends could set global development back decades.

“We are at the cusp of a vicious cycle that could impact societies for years,” Saadia Zahidi, the WEF’s managing director, said in a statement issued on Monday. 

“The pandemic and war in Ukraine have fragmented the global economy and created far-reaching consequences that risk wiping out the gains of the last 30 years. 




Saadia Zahidi, WEF managing director, speaking during the panel discussion on Monday. (Supplied)

“Leaders face difficult choices and trade-offs domestically when it comes to debt, inflation and investment. Yet business and government leaders must also recognize the absolute necessity of global cooperation to prevent economic misery and hunger for millions around the world.”

The most visible effect of this disruption has been the rising price of food. The war in Ukraine is expected to increase wheat prices by 40 percent this year, while the price of vegetable oils, cereals and meats continue to skyrocket.

The process of “deglobalization,” a term coined by the Chief Economists Outlook report in 2021 to describe the effects of the COVID-19 pandemic, has been expedited by the economic and geopolitical fallout from the invasion of Ukraine.

The country is one of the world’s biggest exporters of grain and vegetable oils and the blockade of its Black Sea ports has disrupted the global supply of these commodities. In addition, Ukrainian farmers displaced by the conflict have been unable to tend this year’s crops, foreshadowing further shortages.

During a panel discussion at the Davos meeting, David Beasley, executive director of the World Food Program, said that about “49 million people are knocking on famine’s door in 43 countries,” including Yemen, Lebanon, Egypt, Mali, Burkina Faso, Congo, Guatemala and El Salvador. 

“This is going to be hell on earth,” Beasley said on the opening day of the WEF event. “Because of this crisis, we are taking food from the hungry to give to the starving.” 

 

It is not only rising food prices that concern economists. The World Bank expects energy prices to increase by 50 percent in 2022, before easing in 2023-24. Many fear that government efforts to mitigate the threat of energy insecurity will prioritize carbon-intensive sources rather than green renewables, setting back climate action.

In many advanced economies, the rising cost of living is already having a detrimental effect on quality of life.

Speaking during a visit to Tokyo on Monday, US President Joe Biden acknowledged the squeeze many Americans are feeling as a result of high inflation and supply-chain shortages but said a recession is not inevitable.

“Our GDP is going to grow faster than China’s for the first time in 40 years,” he said. “Now, does that mean we don’t have problems? We do. We have problems that the rest of the world has, but less consequential than the rest of the world has because of our internal growth and strength.”

Biden’s rejection of an imminent economic slump in the wake of financial market jitters about “stagflation,” which means persistent high inflation combined with high unemployment and stagnant demand in an economy, found backing from another of the speakers at the Davos gathering, Kristalina Georgieva, managing director of the International Monetary Fund.




Kristalina Georgieva, managing director of the International Monetary Fund, participating in a panel discussion of the WEF on Monday. (Screengrab from WEF video)

However, she admitted that the IMF expects weak growth in comparison with last year, when the world was emerging from the worst of the pandemic, and added that there is now a risk of further declines because of the war in Ukraine and the resulting fragmentation.

“The costs of further disintegration would be enormous across countries,” Georgieva said in a blog post ahead of the WEF meeting, highlighting the potential for new waves of cross-border migration.

“And people at every income level would be hurt — from highly paid professionals and middle-income factory workers who export, to low-paid workers who depend on food imports to survive.

“More people will embark on perilous journeys to seek opportunity elsewhere.”

 

 


Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 

Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 
Updated 13 sec ago

Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 

Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 

RIYADH: Saudi telecom operator Mobily has deployed a new artificial intelligence-based technology with Swedish firm Ericsson to enhance network performance across the Kingdom.   

The ‘Ericsson AI-based network solution’ is expected to enhance end-user experience by providing 5G network diagnostics and root cause analysis, according to a press release. 

The announcement about the new technology, which will help cater to the needs of the growing number of mobile phone users, was made during the LEAP 23 international technology conference in Riyadh.  

“Ericsson’s artificial intelligence-based solution enables our customers to enjoy superior and uninterrupted 5G connectivity to stay connected with loved ones or to document key moments anytime, anywhere,” said Mobily Chief Technology Officer, Alaa Malki. 

The network diagnostics capabilities within the software suite are expected to provide ‘proactive network optimization’, allowing the operator to identify and resolve network anomalies, along with providing reliable connectivity, the press release noted.  

Ekow Nelson, vice president at Ericsson Middle East and Africa, said: “Our success relied on Ericsson’s artificial intelligence-based network solution built with machine learning models that learn from the live network using the multiple sources of data to deliver near real-time improvements, thus avoiding interruptions during critical and peak times.”  

Both companies also announced the launch of Mobily Pay, a mobile financial service, during the ongoing LEAP 23 international technology conference. The new solution will allow all the users in the Kingdom to conduct personalized financial transactions like contactless payments, money transfers, international remittances, digital card payments, cash-back, bill payments, and mobile top-ups. 


Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  

Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  
Updated 17 min 2 sec ago

Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  

Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  

RIYADH: Saudi Arabia issued 4,358 investment licenses in 2022, up 53.9 percent compared to 2021, as the Kingdom steadily emerges as an investment destination in line with the goals outlined in Vision 2030.  

According to a monthly report from the Kingdom’s Ministry of Investment, the number of licenses approved in the fourth quarter of 2022, excluding those granted under the “Tasattur” anti-concealment campaign, rose 30.7 percent year-on-year to 1,276. 

“This increase reflects the growing position of Saudi Arabia as an attractive investment destination with competitive advantages including a stable and business-friendly investment environment,” said MISA in the report. 

The ministry further revealed that the government’s total revenues increased to SR283.8 billion ($75.64 billion) in the fourth quarter of 2022, recording 5.4 percent growth over the same period in 2021. 

MISA expects that figure to reach SR1.23 trillion in 2022, up by 27.8 percent on an annual basis. 

The government also managed to reduce its expenditures by 1.8 percent to SR331.3 billion in the fourth quarter of 2022 on an annual basis, the MISA data revealed.  

However, it expects government expenditures to reach about SR1.13 trillion in 2022, up by 9 percent compared to 2021. 

Saudi Arabia’s stock exchange, known as Tadawul All Share Index, showed a decrease of 7.1 percent in the fourth quarter of 2022 on an annual basis, while the parallel market Nomu registered a decrease of 25.2 percent during the same period. 

The MISA report attributed the decrease in these indexes to global economic uncertainties and fluctuations in oil prices. 

Saudi Arabia’s inflation rate also rose to 3.1 percent in the fourth quarter of 2022, compared to the same period in 2021. 

The MISA report attributed the rise in inflation rate to a number of factors including the increase in prices of housing, water, electricity, gas, and other fuels by 5.6 percent, and food and beverages by 4.0 percent. 

The Kingdom’s Real Estate Price Index increased by 1.6 percent year-on-year in the fourth quarter of 2022, primarily driven by the increase in the prices of residential real estate prices by 2.6 percent. 

According to the report, the Real Estate Price Index for the full year 2022 showed an increase of 1.1 percent on an annual basis.


Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 

Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 
Updated 07 February 2023

Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 

Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 

RIYADH: Saudi Arabia’s share of transshipment operations in the region has almost tripled in three years, according to the Kingdom’s Minister of Transport and Logistics Saleh Al-Jasser. 

The level rose to 32 percent in 2022, up from 12 percent three years prior, the minister revealed.

The Kingdom is aiming for a 50 percent regional share of transshipment - the act of off-loading a container from one ship and loading it onto another ship to its final destination – by the end of the decade as part of its Vision 2030 goals.

It also intends to have the largest share of transit maritime trade in the Red Sea, drawing in global transshipment operations to Saudi ports. 

“Seventeen international maritime lines were launched in the Kingdom, which increased the interconnection of ports and increased the process of exports, imports, and transportation through the Kingdom to other countries,” Al-Jasser told Asharq on the sidelines of the LEAP conference taking place in Riyadh. 

The Ministry also initiated the Unified Logistics Window on Monday to grant access to operational services in numerous languages across multiple entities from the country’s logistics ecosystem. 

Al-Jasser added that the platform will facilitate the beneficiary and improve the customer experience.  

While it currently comprises 70 transportation system services, the platform aspires to increase to 450 automated services in 2025. 

“What we are currently working on is re-engineering, facilitating, and unifying these services. The platform is intended for individuals, the business sector, and government agencies that are integrated with the transportation system,” added the minister.  

As for the Kingdom’s railway sector, the minister underlined that the expansion plans of the railways in the near future will focus on achieving connectivity both locally and in the region.  

The sectoral rail strategy is set to add around 8,000 km to the current rail network, which is  currently 5,500 km, according to Al-Jasser's statements to Asharq. 

Another main concern of this strategy is Saudi Arabia’s rail transport of goods – the total tons transported on trains in 2022 is equivalent to the displacement of almost two million trucks from the Kingdom’s roads. 


Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists

Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists
Updated 07 February 2023

Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists

Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists

RIYADH: The transport sector's dependency on fossil fuel has dropped by just 3 percent since the 1970s, Saudi Aramco's Transport Chief Technologist Amer Amer said as he emphasized the need to keep developing green fuels.

Speaking on the third day of the International Association for Energy Economics conference in Riyadh, Amer insisted there needs to be more effort put into technology development to ensure significant greenhouse gas emission reductions.

Amer said: “Improving the technology, not only on the engine side but also on reducing the carbon intensity of fuels that go into these vehicles, will result in an immediate reduction in greenhouse gasses. 

“Also, Saudi Aramco is working on direct air capture to bring the cost of this technology to less than $100 per tonne of CO2.”

His comments came during a panel session focused on the technology and regulatory options needed to deliver transport services, while meeting the challenges of resource use, emissions, cost, and impact on the urban environment.

Geetam Tiwari, professor of civil engineering, transportation research, and injury prevention program at IIT Delhi, used her appearance on the panel to warn that when creating transport systems, investing or relying only on technology innovation may not be the answer. 

“Many innovations happen because of setting targets by governments, regulations are required,” she said.

Tiwari used the example of electric buses to highlight the need for a pragmatic approach in this area.

“Instead of straight away emphasizing on a 100 per cent conversion to electric, we have to go slowly and understand all the barriers and problems that we are going to face,” she said. 

Gerardo Rabinovich, the previous president of the Latin American Association of Energy Economics used his remarks to warn about the high entry costs for consumers into green transportation.

“We have economic barriers already for the electric vehicle because the price of an electric vehicle for the people is 50 per cent more than the regular vehicle, and that needs fiscal incentive and maybe subsidies,” he said.

Andreas W. Schäfer, chair of energy and transport at the University College London Energy Institute, insisted that renewable technologies “must be market ready and deployable at scale by 2030.”

He warned against seeing liquid hydrogen – which is used in rocket fuel – as a potential resource in this area, as it would require major infrastructure transformation to make it viable. 

Topics being tackled at the forum, which runs from Feb. 4 to 9, including renewable energy opportunities and challenges, challenges facing the power sector in the MENA region, and the impact of oil price volatility on supply and investment.

The IAEE is a global non-profit organization formed in the US in 1977 and works to promote dialogue and the exchange of ideas around the economic analysis of energy resources.


COP28 President Sultan al-Jaber says he is listening, ready to engage

COP28 President Sultan al-Jaber says he is listening, ready to engage
Updated 07 February 2023

COP28 President Sultan al-Jaber says he is listening, ready to engage

COP28 President Sultan al-Jaber says he is listening, ready to engage

BENGALURU: The UAE climate envoy and designated COP28 president said on Tuesday his country, which is due to host the summit later this year, was approaching the task with humility, responsibility and urgency. 

"It is not a conflict of interest. It is in our common interest to have the energy industry working alongside everyone on the solutions the world needs," Sultan al-Jaber, who is also head of the state oil giant ADNOC, said at the India Energy Week conference. "The UAE COP presidency is listening and ready to engage." 

Jaber's appointment to lead the climate summit this year fuelled activists' worries that big industry was hijacking the world's response to the global warming crisis. 

The UAE, a major OPEC oil exporter, will be the second Arab state to host the climate conference after Egypt in 2022. 

The UAE and other Gulf energy producers have called for a realistic energy transition in which hydrocarbons would keep a role in energy security while making commitments to decarbonization. 

"We cannot unplug the current energy system before we have built the new one," said Jaber, who was the founding CEO of Abu Dhabi renewable energy firm Masdar before becoming ADNOC chief.

"We must minimize their carbon footprint, only invest in the least carbon-intensive barrels and continue to reduce their intensity," he added. 

Jaber also said developing nations had seen little justice so far when it comes to energy transition and pointed to capital needed to fully operationalize the loss and damage fund approved in COP27. 

The deal to create the fund was hailed as a breakthrough for developing country negotiators at the Egypt summit last year but climate activists have since complained that the fund remains empty of cash. 

The Nov. 20-Dec. 12 COP28 will be the first global stocktake since the landmark Paris Agreement in 2015. 

On Tuesday, Jaber said that eliminating energy poverty was essential alongside keeping the goal of capping global warming at 1.5 degrees Celsius alive.