Category: Economy

The International Monetary Fund (IMF) has announced to block Afghanistan’s access to the emergency reserve. The reserves were worth USD 460 million which will not be accessed by the Taliban after they took over the control of the country.

The decision was taken after being pressured by the Biden administration to restrict the Taliban to access the funds. The terror group entered the capital city Kabul of Afghanistan and seized control of the country. Taliban has taken over the parliament building, malls, government offices and taken everything under their control.

The United Nations have also called on countries to stop all forcible returns of Afghan refugees. It also announced that a third of International staff would be temporarily relocated to Kabul owing to the “volatile situation in the country”.

To stop the Taliban from carrying out any terrorist activities with those funds, the decision was taken by the authorities. Further misuse of the funds is not acceptable by the US government.

The leaders of the Taliban are discussing the future government in Doha as they are in constant touch with the international community and intra-Afghan parties to make a government in Afghanistan.

The second quarter of Japan’s economy has joined the turnaround seen across G7 countries as the lockdown restriction eases. The consumers were seen rushing to the shops after relaxation in the lockdown.

The world’s third-largest economy returned to health with a surge in exports. Japan beats the expectation of City analysts by capitalizing on global trade’s return. The first quarter saw a drop of 0.9% after which the economic output expanded to 0.3% in the second quarter, or by 1.3% using the annualized calculation which is more commonly cited by Tokyo. However, the analysts expected the annualized growth to be only 0.7%.

The emergency which was imposed in the final days of the Olympics summer games to tackle the Delta Variant had dampened the momentum in the third quarter. A surge in the new variant of COVID-19 in Asia has caused supply chain disruptions to some of the Japanese manufacturers. This could weigh on factory output and add gloom for an already fragile recovery.

Yoshiki Shinkle who is the chief economist at Dai-ichi Life Research Institute said that there is not much to be optimistic on the outlook with the spike in infection heightening the chance of stricter curbs on activity.

Indian Prime Minister Mr. Narendra Modi has announced Rs.100 lakh-crore to “Gati Shakti Master Plan” in his speech on 75th Independence Day. In PM’s speech, he pegged the project to be the source of employment opportunity in the future for the youth of the nation.

Mr. Modi said in his speech that in the coming years they will launch the PM Gati Shakti Plan, a huge national infrastructure master plan that will make a foundation for “holistic infrastructure” and will give an integrated pathway to India. It will help raise the global profile of local manufacturers of the nation and will help them compete with their counterparts worldwide. This will also raise the possibility of new future economic zones. He focuses on increasing both the manufacturing and exports of every product to be sold globally from India to be attached to India. Mr. Modi asked manufacturers to value their products as all their products will be the brand ambassador for India.

Further details and the launch date regarding the project is awaited. Mr. Modi’s other announcements included the launch of the National Hydrogen Mission and the opening of the Sainik Schools for girls across the nation.

The Chinese president Mr. Xi Jinping’s government said it will make new laws on national security, monopolies, education, and culture. Signaling on that ongoing crackdown on various industrial sectors will continue to be the same. China’s cabinet, the ruling Communist Party of China (CPC), and the state council have published the plans as a part of a five-year plan. On Wednesday, the five-year plan was publicized for building a law-based government.

Xi Jinping has made the “rule of law” which is one of the several signature aspects of his governance style. It will be extended to the third term next year if as expected. The CPC report also revealed that the blueprint for five years till 2025 will also focus on improving the legislation around public health by rephrasing the infectious law and the “frontier health and quarantine law”. The ten-point plan was reported by the Xinhua news agency. According to them, China’s top leadership urged governments of all levels to promote law-based administration with the help of digital technologies. They further urge the inclusion of the internet, big data, and artificial intelligence.

To improve the law-based business environment the government plan calls for concrete efforts to prevent the administrative power from eliminating or stifling competition.

On Wednesday, World Health Organization Direct-General Mr. Tedros Adhanom Ghebreyesus called for a moratorium on administering booster shots of the COVID-19 vaccine. The appeal was generally made to the wealthier countries that have far outpaced the developing world in vaccinating its citizens.

WHO wants to help and ensure that the doses are available in the countries where fewer people have received their first shots. According to the AsiaOne survey, richer countries have administered 100 doses for every 100 people on an average for coronavirus vaccines. Meanwhile, the poorer countries are hampered by the short supplies and could administer only 1.5 doses per 100 people. WHO has urged wealthier countries for cooperation and argued that no one is safe until everyone is safe. It even warned about the longer and more widely the coronavirus circulates, the risk for new variants could emerge and cause a global crisis for a prolonged time.

Researchers are yet to confirm the efficiency of giving booster shots to people who have already received their two doses of vaccines. It is unproven that boosters will prevent the spread of the coronavirus. Tedros called for a moratorium on booters until the end of September to enable at least 10% of the population to be vaccinated in every nation.

International Monetary Fund (IMF) is a government body that approved $650 billion in the agency’s resources to support economically vulnerable countries. The funds will support those who are battling with the coronavirus pandemic and the economic downturn.

On August 2, 190-nation leading institute IMF said that its Board of Governors approved the expansion of its reserves. These reserves are known as Special Drawing Rights. They assume this to be the largest increase in the institution’s history. It is believed to be a historic decision for the global economy at a time of unprecedented crisis. The Managing Director of IMF Kristalina Georgieva said that this will particularly help their most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.

From August 3, the general allocation of SDRs will become effective. Nearly $275 billion allocations will be going to the world’s poorer countries. They further added that the reserves will be credited to IMF member countries. The funds will be in proportion to their existing quotas with the agency. The agency is even trying harder to look for the ways in which richer countries can voluntarily channel SDRs to poorer countries.

The SDR increase was a matter of concern for many Republican members of Congress who stated that the expanding IMF resources can benefit the US adversaries such as China, Russia, and Iran. Meanwhile, International relief agencies were seen strongly supporting the increase.

On Monday, the World Bank introduced a new channel to allow developing countries to purchase COVID-19 vaccines collectively through the Covax facility. The Covax facility was set up to ensure access to vaccines for 92 developing territories with the cost covered by donors.

Covax is co-led by the World Health Organization (WHO), the Gavi vaccine alliance, and the coalition for Epidemic Preparedness Innovations. The Gavi chief executive Seth Berkley said in a statement that the financial mechanism will allow Covax to unlock additional doses for a subsidized rate and the middle-income countries.

The staggering imbalance in the global distribution of covid-19 vaccine doses has raged WHO. According to an AFP count, approximately 3.9 billion doses of Covid-19 are injected around the world in around 216 territories. Developed territories have administered 95.4 doses per 100 inhabitants. The figure stands at 1.5 doses per 100 people in 29 low-income countries.

The facility says they will make advanced purchases from vaccine manufacturers based on aggregated demand across countries while using money from the World Bank and other development banks. The Covax financial mechanism agreement aims to provide 430 million additional doses to fully vaccinate 250 million people. 92 countries will receive these doses between late 2021 to mid-2022.

Israel government reports that they will cut the emission of carbon by 85% from 2015 levels by 2050. Israelian prime minister said the decision will be helpful in gradually shifting to a low carbon economy. They signed the Paris climate deal and set themselves an interim goal of cutting emissions by 27% by 2030.

The plan is to target emissions from the transport sector, electricity sector, and municipal waste. However, critics aim for more ambitious targets for renewable energy and bigger economic incentives for change. Since the industrial era has begun, the world has warmed up by about 1.2C, and if there are no proper measures taken it will keep on rising. Governments around the world need to take necessary measures to steep cut the emission.

In line with the 2015 Paris climate agreement, Israel was targeting to legally bind with an international treaty on climate change which is already adopted by 200 countries. Prime minister Naftali Bennett said the move will lead to a clean and efficient and competitive economy. He further added that this will put Israel at the forefront of the battle against climate change. The target is to keep global temperature below 2.0C above pre-industrial times. If things are favorable they even plan to reduce it to 1.5C above pre-industrial time.

Nations producing oil have agreed to increase their outputs and reduce the prices for the same. It aims to ease the pressure on the world economy. From August the OPEC and the partners such as Russia focus on boosting the supply for oil after the price hike for two-and-half-year highs during the COVID-19 Pandemic.

The increase in Brent crude oil for this year is up by 43% which is almost $74 a barrel. Due to the pandemic, last year OPEC decided to cut the production by a record of 10 million barrels per year (BPB). However, after the economies reopened this year the price of oil surged which led to inflation and threatened to put the brakes on the global recovery.

The conflicts between Saudi Arabia and the United Arab Emirates regarding tariffs were among one of the reasons for the hike in price. The proposal by Riyadh and Moscow to extend the output curb to 2022 was blocked by Abu Dhabi. They rejected the demand to produce more oil.
OPEC and partners have finally agreed upon increasing its supply by two million barrels per day in the new deal. The change in supply will commence from August until December 2021. From May 2022, high quotas have also been agreed upon for many members including UAE, Saudi Arabia, Russia, Kuwait, and Iraq.

Pacific Rim leaders will gather virtually to discuss the strategies for helping the economies rebound from the resurgent COVID-19 pandemic. The Pacific Rim includes world leaders such as the U.S. President Joe Biden, China’s Xi Jinping, Japan’s Yoshihide Suga, and Vladimir Putin of Russia.

On Friday, New Zealand Prime Minister Jacinda Ardern will chair the special leader’s meeting. The meeting includes a 21-member Asia-Pacific Economic Cooperation forum. White House stated that there was a telephonic conversation between Biden and Ardern ahead of the leader’s retreat to discuss U.S. interest in maintaining a free and open Indo-Pacific region. A premium has been laid down intending to relations with allies in the Pacific by the Biden administration.

The forum member disagrees with the issue of pandemic and vaccine diplomacy and states it to be more inclined towards sustainable economic growth and prosperity in the Asia-Pacific region.

The virtual meeting of the Rim will straddle 11 time zones which are being chaired from New Zealand’s capital Wellington. The prime minister said that leading a regional response to the pandemic was one of their highest priority when they took over APEC’s chair from Malaysia in an annual rotation among the 21 members.

Ardern added that APEC leaders will work together to get through the pandemic and promote a sustainable and inclusive recovery as she believes nobody is safe unless everyone is safe.