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World Bank: Coronavirus Exacerbating Poverty in Southeast Asia

Source: World Bank, East Asia and Pacific in the Time of COVID-19

As many as 24 million fewer people will escape poverty in Southeast Asia this year as a result of the unprecedented economic shocks caused by the coronavirus. And that’s only the baseline estimate from the World Bank’s latest report on the region; its worst-case scenario has the number of impoverished people in East Asia and the Pacific rising by 11 million.

The impact varies per sector, with households reliant on the manufacturing sector for income to be hit the hardest. “Poverty rates could double among households in Vietnam linked to manufacturing reliant on imported inputs and in some Pacific Islands where tourism is an important source of employment,” the report reads.

The report points to the effective containment measures in Singapore and South Korea — which limited the economic disruptions from the crisis — as role models for other Asian countries to follow. “The sooner other countries create such containment capacity, the sooner they can end the economic pain caused by stringent suppression measures.”

Recession Fears Drive Volatility in German Bonds

The eurozone bond market is experiencing volatility at levels last seen during the 2011 eurozone debt crisis and 2008 financial crisis, as uncertainty about rising interest rates and recession fears continue to grow.

Germany — the benchmark for the euro — has seen swings in its 10-year bund (German federal bond) of at least a 0.1 percentage point range on 79 days in 2022, reports the Financial Times. The spread between German and Italian 10-year-yields was at its highest level this month, near 2.3 percentage points.

Liquidity in bond markets has been impacted by a looming recession and the European Central Bank’s continued interest rate hikes. The ECB has signaled that it will raise interest rates another half percentage point at its meeting on September 8 in an attempt to curb inflation. Inflation in Germany is forecast to rise above 10% for the first time in 70 years, and eurozone inflation reached a record high of 8.9% in July. 

Adding to investors’ worries is the ECB’s slowdown on its bond-buying programs, including the end of its 1.7 trillion euro ($1.7) Pandemic Emergency Purchase Programme and the expected third-quarter end of its €3.3 trillion ($1.3) Asset Purchase Programme

US Joins Other Countries in Adopting EVs

The U.S. has reached a critical tipping point for the sale of fully electric vehicles, with 5% of new car sales being fully electric, reports Bloomberg. Nineteen countries have passed the 5% tipping point, including the three largest car markets: Europe, China and the U.S. If the U.S. follows the trends of other large-scale EV adopters, a quarter of car sales will be electric by the end of 2025.

Electric cars and hybrids are becoming more popular worldwide — there are more than 20 million electric vehicles on the road this year, and that number will double by the end of 2023. Government incentives and environmental regulation are the reasons for growing global demand for EVs. Continued growth relies on increased production by automakers, including reconfigured factories and supply chains.

The next largest car markets approaching the 5% tipping point this year include Canada, Australia and Spain. But countries that account for one-third of car sales worldwide still haven’t reached the 5% tipping point. Latin America, Africa and Southeast Asia haven’t yet adopted EVs on a wide scale.

What Cyber Risks Are Keeping the C-Suite Up At Night?

Source: Mercer Global Talent Trends 2022

Executives around the world are concerned about cybersecurity and data security as employees continue to work remotely, reports Mercer in its Global Talent Trends 2022 study. Forty-one percent of HR leaders say that employees’ relaxed attitude toward data security at home and hackers breaching company systems (40%) are top-of-mind risks. 

Other leaders are concerned about ethical data practices. Thirty-five percent say that the lack of policies addressing ethical data collection and handling is a risk, while around 32% say that misuse of employee monitoring data and over-reliance on AI are concerns.

While cyber risk and data security remain the top concern in North America, executives also expect to grapple with inflation, the economy, and new work models. Latin American leaders see new work models as their primary challenge. Business resilience is the top concern for business leaders in Asia, while digital acceleration is the top concern in Europe.

Foreign Investment Recovers to Pre-COVID Levels

Global foreign direct investment (FDI) has rebounded to nearly its pre-pandemic levels, reports Investment Monitor. The number of greenfield FDI projects rose 18% last year, as economies reopened and vaccinations became more widespread. But FDI will very likely fall in 2022, as the Ukraine conflict, supply chain disruptions, and inflation impact investment levels.

Twenty-six of 34 global FDI sectors experienced yearly growth in 2021. Software and computer services remained the leading sector, with 2,886 projects. Communications and media also grew quickly, almost doubling its number of projects in 2021 compared to 2020. 5G, points of presence and edge locations, and continued data center construction made it the third-largest FDI sector.

Renewable energy was one of the largest growth sectors with 36% more projects than 2020, a breakthrough that’s been on the horizon for several years. Investment in all sectors related to sustainable development goals rose by 39% in 2021, as governments and stakeholders prioritize sustainability.

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