Latin America isn’t at risk of a 1980s-style crisis (but an era of missed opportunities looms)

Food lines that stretch across multiple city blocks. Spiraling unemployment. Out-of-control inflation. Unsustainable debt. These issues, which traumatized many economies across Latin American in the 1980s, continue to reverberate today and,brazil_hero.jpg given current economic conditions, you could be forgiven for fearing that history is about to repeat itself.

However, the region’s biggest risk at present is not another “lost decade” fueled by financial crises, but rather a decade of missed opportunities. 

The debt crises of the 1970s and 1980s were searing experiences that find an echo in today’s troubles. Then, as now, Latin American countries had large debt loads. Then, as now, the global economy experienced unique macroeconomic shocks that sent inflation soaring (the Arab oil embargo then; the pandemic and Ukraine war now). And then, as now, central banks around the world – especially the US Federal Reserve – were raising rates to fight inflation.

 

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Global Economic Prospect: GLOBAL STAGFLATION

WASHINGTON, July 29, 2022 – Some additional 2 million people will benefit from a second Global inflation has risen sharply from its lows in mid-2020, on rebounding global demand, supply bottlenecks,
and soaring food and energy prices, especially since the Russian Federation’s invasion of Ukraine. Markets expect inflation to peak in mid-2022 and then decline, but to remain elevated even after these shocks subside and
monetary policies are tightened further. Global growth has been moving in the opposite direction: it has declined sharply since the beginning of the year and, for the remainder of this decade, is expected to remain below the
average of the 2010s. In light of these developments, the risk of stagflation—a combination of high inflation and sluggish growth—has risen. The recovery from the stagflation of the 1970s required steep increases in
interest rates by major advanced-economy central banks to quell inflation, which triggered a global recession and a string of financial crises in emerging market and developing economies (EMDEs). If current
stagflationary pressures intensify, EMDEs would likely face severe challenges again because of their less well anchored inflation expectations, elevated financial vulnerabilities, and weakening growth fundamentals. This
makes it urgent for EMDEs to shore up their fiscal and external buffers, strengthen their monetary policy frameworks, and implement reforms to reinvigorate growth. Phase of the West Africa regional Food Systems Resilience Program (FSRP-2) approved today for a total amount of $315 million in International Development Association (IDA*) financing. FSRP-2 will support Chad, Ghana and Sierra Leone to increase their preparedness against food insecurity and to improve the resilience of their food systems. This comes at a moment where it is projected that approximately 38.3 million people in West Africa are projected to be in food security crisis.

Global Economic Prospects — June 2022 (worldbank.org)

 

 

Smarter taxation can help boost government revenue and health outcomes

The shockwaves of the war in Ukraine hit many countries while they were still reeling from the COVID-19 pandemic. For many developing countries, the fiscal challenges have mounted ever since—the result of surging food, fertilizer andhealth_tax_blog_1140x500_1.png energy prices, rising interest rates, and slowing growth.

In response to the overlapping crises, nearly all countries increased their overall government and health spending. But only a few of them—mostly high-income countries—will be able to sustain these levels in the years ahead. Improving domestic resource mobilization, especially in a way that can sustainably broaden tax bases, will be crucial.

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Invisible Bonds: resilience building in the horn of Africa’s borderlands

It is often said that a picture is worth a thousand words. This is particularly the case in thewater-blog-invisible-bonds.jpg Horn of Africas (HoA) borderlands, where images can send an unequivocal message as to the value of water both as part of local and regional approaches to resilience building.

Maps and the use of geographical information systems (GIS) are also key tools in understanding the value of ‘unseen’ resources such as groundwater, a topic that will be at the forefront of the discussions among international water experts at the upcoming World Water Week in Stockholm, Sweden.

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Food Security Update

Download latest Food Security Updatefood-security-page

August 15, 2022 – Record high food prices have triggered a global crisis that will drive millions more into extreme poverty, magnifying hunger and malnutrition, while threatening to erase hard-won gains in development. The war in Ukraine, supply chain disruptions, and the continued economic fallout of the COVID-19 pandemic are reversing years of development gains and pushing food prices to all-time highs. Rising food prices have a greater impact on people in low- and middle-income countries, since they spend a larger share of their income on food than people in high-income countries. This brief looks at rising food insecurity and World Bank responses to date. 

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What IPCC climate projections mean for World Bank energy projects in Africa

 

We already knew climate change would be a major threat to development gains in Africa, but a blog_senegal_energy_-_with_wbg_cop27_branding_fullrecent report by the UN’s Intergovernmental Panel on Climate Change (IPCC) reveals the impacts could be significantly worse. Across the continent, research indicates with greater precision and certainty the future increases in flooding severity and extreme weather events over the coming decades. Among the findings: In West Africa, the number of potentially lethal heat days reaches 50–150 per year at 1.6°C global warming and 100–250 per year at 2.5°C global warming, with the highest increases in coastal regions; In Southern Africa, heavy rainfall events would become more frequent and intense at all levels of global warming, increasing exposure to flooding; and, at 2°C global warming, unprecedented extreme droughts are projected to emerge. These are alarming projections given that the continent is the least responsible for climate change but most vulnerable to its consequences.

Yet even as the climate crisis accelerates, Africa needs to close its huge energy access gap and achieve its development goals. Millions of people across Africa still lack access to basic electricity services.  Communities still live without reliable and affordable electricity needed to deliver social services and to be more resilient, better prepared, and more responsive when disasters hit.

“Yet even as the climate crisis accelerates, Africa needs to close its huge energy access gap and achieve its development goals.

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Three ways a strong dollar impacts emerging markets

World Bank Mobilizes $4.5 billion in Additional Financing for Vital Support to Ukraine

 

WASHINGTON, August 8, 2022—The World Bank Group today announced $4.5 billion in additional financing mobilized for Ukraine under the Public Expenditures for Administrative Capacity Endurance in Ukraine (PEACE) Project, which aims to help the Government of Ukraine meet urgent needs created by the ongoing war. The financing package is comprised of a $4.5 billion grant provided by the United States.

The additional financing will contribute to sustaining the government’s administrative and service delivery capacity to exercise core functions at the national and regional levels. Specifically, the project will help the Government of Ukraine to cover social payments, healthcare services, and pensions, which are essential for the well-being of the country’s citizens in mitigating the social and economic impacts of the war.

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World Water Week 2022

August 23-September 01, 2022siwi-wwweek-main-photo780
Online and Stockholm, Sweden

World Water Week, organized each year by the Stockholm International Water Institute (SIWI), brings together experts, professionals, innovators and entrepreneurs from various sectors and countries with the aim of developing solutions for water-related challenges.

The theme of this year’s event is “Seeing the Unseen: The Value of Water,” with a focus on the diverse aspects of water, how others view and value water, and the exploration of water’s full value to society. For the first time, the conference will be hybrid, allowing delegates to join online and/or in-person in Stockholm, Sweden.

The World Bank Group will convene and participate in multiple sessions on topics ranging from transboundary cooperation and financing to agriculture, technology, innovation, and the climate crisis.

You can also follow our sessions along via @WorldBankWater using #wwweek