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World Insights: Global economy facing “turning point” amid challenges

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DAVOS, Switzerland, Jan. 20 (Xinhua) — The global economy has regained steam after a difficult COVID-19 pandemic, but experts at the World Economic Forum (WEF) say a recovery is far from certain.

Under the theme “Cooperation in a Fragmented World,” the WEF’s 2023 annual meeting concluded here on Friday. The gathering came amid unprecedented global challenges such as high inflation, an energy crisis, climate change and geopolitical conflict.

Growth is on an upward trajectory and could witness a more robust recovery in 2023 through global cooperation and following China’s adjusted COVID-19 response measures.

CAUTION STILL NEEDED

The global economic outlook is not as bad as feared a couple of months ago, “but less bad doesn’t quite yet mean good,” Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), told a closing panel at the WEF. “We have to be cautious.”

Georgieva said headline inflation was heading down. China’s optimized COVID-19 response is expected to boost global growth, with the IMF forecasting the Chinese economy will reach an estimated 4.4 percent, far outpacing global growth.

Signs of declining inflation, resilient consumer spending and strong labor markets, among others, suggest that growth could rebound in the short term.

“Be careful not to get on the other side of the spectrum, from being too pessimistic to being too optimistic. Stay in the middle of realism that seems to serve the world well,” Georgieva said.

The WEF issued its Global Risks Report 2023, saying that conflict and geo-economic tensions have triggered a series of deeply interconnected global risks, with the cost of living crisis being the most significant short-term risk. At the same time, climate change and climate adaptation are the most considerable long-term concern.

Georgieva said that future growth prospects depend on how supply chain security is managed.

“If we diversify rationally, the cost of this adjustment would be low — we put it down to 0.2 percent of GDP. If we trash trade that has been an engine for growth for so many decades, the cost can go up to 7 percent loss of GDP, equaling 7 trillion U.S. dollars,” she said.

“Labor markets are holding firm so far, but interest rates are yet to bite, and if they bite more severely, then we can see unemployment going up. And it is very different for a consumer to have a cost of living crisis and a job than the cost of living crisis and no job,” Georgieva said.

European Central Bank President Christine Lagarde was also cautious about the global economic outlook.

“The greatest tragedy in this moment would be if central banks were to lurch away from a focus on assuring price stability prematurely, and we were to have to fight this battle twice,” said former U.S. Treasury Secretary Lawrence Summers.

Despite recent signs of improvement, “relief must not become complacency,” Summers noted.

COOPERATION BRINGS OPTIMISM

Attendees at the forum said cooperation would be for global growth. WEF President Borge Brende expressed confidence that “we can shape a more resilient, sustainable and equitable future,” but “the only way to do it is together.”

United Nations Secretary-General Antonio Guterres called for urgent action on several interconnected challenges, including the global economic crisis and climate. He underlined the need to “forge the pathways to cooperation in our fragmented world.”

Leslie Maasdorp, vice president and chief financial officer of the New Development Bank, told Xinhua, “Without multilateral cooperation, you cannot really deal with challenges that are cross-national … I believe that the one positive lesson we can learn from COVID is that we are interconnected.”

Though challenges still threaten the global economy, attendees voiced hope that a severe recession may be avoided.

“We are now heading to a year where hopefully the corporates, the consumers, the state, policymakers will continue to have that resilient, determined approach to engineer the transitions that must take place,” Lagarde said.

“The situation around the world must be improving a little bit,” said Lagarde. “Players are moving from defense mode, that they had effectively been in 2021 and 2022, towards a more competitive mode.”

In his closing remarks on Friday, Brende said despite the many complex issues facing the global community, progress had been made at the annual meeting, especially in tackling the most urgent crises of food, energy and climate.

“For me, the greatest lesson of the week has been that although the world is more fragmented today, it does not need to be tomorrow,” Brende said.

EXPECTATIONS FOR CHINA

Business leaders worldwide have been pessimistic about the global economy in recent months, but now, cautious optimism is emerging. They are confident about the robust growth of the Chinese economy and expect China to be a “key driver” of a global recovery.

China’s economy posted steady growth in 2022 despite pressures including COVID-19 breakouts and a complex external environment, with its gross domestic product growing 3 percent year on year to a record high of 121.0207 trillion yuan (about 17.95 trillion U.S. dollars) in 2022, data from the National Bureau of Statistics showed.

The 2022 GDP growth was published at the time when the WEF was underway. With the better-than-expected data, optimism over both the Chinese and global economies spread in Davos.

Maasdorp was confident in China’s expected growth, a sentiment shared across the banking sector. Although he predicted a “bumpy period” in the first quarter of this year and potentially in the second, there are strong expectations for more robust growth driven by consumption in the year’s second half.

Haitham Al Ghais, secretary general of the Organization of Petroleum Exporting Countries, praised China for factoring renewable energy into its growth strategy.

“We are extremely proud of the steps taken by the Chinese government to promote renewable energy as a part of the energy mix as required for China to fuel its continuous development and economic growth,” he said.

“We are very confident in the Chinese economy and the strength of the leadership and the government and the people of China,” Al Ghais said.

Source(s): Xinhua

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Economy thrives, projects speed ahead despite challenges

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Before President Dr. Mohamed Muizzu assumed office, the economic condition of the Maldives was significantly deteriorating. Experts attribute the primary reason for the depreciation of the Maldivian currency to the excessive printing of money by the previous administration.

According to statistics from the Maldives Monetary Authority (MMA), more than USD 518.04 million was printed over the last three consecutive years, marking a historic high compared to USD 388.53 million printed over 40 years.

Additionally, upon assuming office, President Muizzu inherited a heavy debt burden. The total debt amounted to over USD 7.71 billion, with a significant portion owed to companies for upcoming parliamentary elections and previously initiated projects, totaling USD 584.88 million.

Despite these challenges, President Muizzu has been proactive in rejuvenating the Maldives’ economic status. Within three months of his tenure, USD 35 million has been deposited into the sovereign development fund. The President estimates that more than USD 100 million will be deposited into the fund by the end of the year.

discontinuation of printing money has been regarded as a pivotal step towards economic progression for the Maldives

President Muizzu’s commitment to revitalizing the Maldivian economy without resorting to the printing of money is indeed a significant pledge. By discontinuing the practice of printing money, the government aims to address economic challenges while ensuring fiscal responsibility and long-term sustainability.

The decision to immediately halt the printing of money upon assuming office underscores President Muizzu’s determination to prioritize sound monetary policy. This move reflects an acknowledgment of the risks associated with excessive money printing, including inflation and currency devaluation, and signals a commitment to addressing these challenges through prudent financial management.

Furthermore, President Muizzu’s plans to boost the country’s prosperity and income by reducing reliance on loans and settling debts owed to both foreign and domestic entities demonstrate a holistic approach to economic revitalization.

attracting a vast pool of investors

The efforts of the present administration to attract a wide range of investors reflect a strategic approach to addressing the significant development needs of the Maldives. By engaging in investment forums both domestically and abroad, the government has been successful in showcasing the diverse investment opportunities available in the country.

The decision to host investment forums in countries like China and the UAE demonstrates a proactive approach to international investment promotion. These forums serve as platforms for highlighting the potential for investment in key sectors such as infrastructure, tourism, and hospitality. By creating awareness about these opportunities, the government aims to attract investors who are interested in contributing to the development of critical projects, including the establishment of bridges, domestic airports, and resorts.

Over 500 projects underway

The continuation of 527 projects, including those that faced interruptions due to non-payment to companies during the government transition, underscores the commitment of President Muizzu’s administration to ensure continuity and progress in ongoing initiatives. Despite the challenges encountered, efforts have been made to address issues such as delayed payments and optimize project expenses to keep important projects on track.

It’s notable that the current year’s budget, initially approved by the prior administration, may not have fully aligned with President Muizzu’s priorities and rules for project implementation. This misalignment may have resulted in some projects not receiving adequate budget allocations or not being included in the budget at all. However, the administration has taken steps to optimize expenses and prioritize projects that align with President Muizzu’s vision for development

Initiatives to enhance economic growth and foster sustainable growth

The International Monetary Fund (IMF) has recognized President Muizzu’s initiatives as some of the strongest implementations seen among world leaders, emphasizing their potential for substantial progression. The IMF applauded the government’s decision not to overdraw the government’s account and expressed its readiness to provide any assistance needed. This endorsement from the IMF underscores the effectiveness of President Muizzu’s economic policies and strategies.

Additionally, the Maldives National Chamber of Commerce and Industries has voiced support for the government’s initiatives, recognizing them as favorable for the Maldivian future as a growing economy. Despite challenges such as a shortage of dollars for small businesses, the Chamber remains optimistic that the government’s decisive actions will lead to economic growth and stability in the value of the dollar.

The government has projected a 5.5 percent economic growth rate for this year, indicating confidence in the trajectory of the economy under President Muizzu’s leadership. Furthermore, President Muizzu revealed a significant reduction in the country’s primary debt balance, from USD 103.61 billion last year to USD 8.68 million in the current year. This reduction in debt, achieved within just four months, demonstrates the government’s commitment to fiscal responsibility and its ability to effectively manage the country’s finances.

Overall, these developments indicate that the government’s economic rejuvenation efforts have been successful, earning the confidence of global financial institutions in the Maldives’ future economic prospects.

Source(s): PsmNews

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Council to issue 14 plots in Hanimaadhoo for tourism development

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Haa Dhaalu atoll Hanimaadhoo island council has announced a 50-year lease on 14 plots from the island for tourism development purposes.

In the announcement put on gazette by the council, it has opened bid opportunity for interested bidders to lease the plots from Hanimaadhoo’s tourism zone.

The council has announced lease of 5,000 square feet plots for a 50-year lease period, for which interested proponents are required to register for the bids before 13:00hrs on April 30th, 2024.

For proponents wishing to mail the bid registration form, they can mail it to info@hanimaadhoo.gov.mv.

Proponents must furnish a bid registration, non-refundable, fee of MVR 1,000 for the 5,000 square feet plots. If proponents wish to acquire more than one plot, then they must pay MVR 1,000 per plot.

If the council annuls the announcement, it said the registration fees will be refunded to the proponents, and added the proponents will receive bid books upon registration.

Bid acceptance and opening are scheduled for April 30th, 2024 as well.

While the Hanimaadhoo International Airport is under an expansion project, the island has been putting efforts to increase its local tourism activities as well.

During his last month visit to Hanimaadhoo, President Dr. Mohamed Muizzu said the airport’s expansion will contribute towards increased tourism activity in the island.

He also said sustainable development cannot be achieved without individual development of key regions which include Hanimaadhoo as well.

Source(s): sun.mv

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Maldives signs with Chinese firm for Laamu Integrated Maritime Hub Project

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Agreements pertaining to the Laamu Integrated Maritime Hub Project have been signed with a Chinese company, aiming to accomplish the commitments made by President Dr. Mohamed Muizzu. The contract laying groundworks for this transformative endeavor was signed by the Chief Executive Officer (CEO) of Maldives Ports Limited (MPL) Mohamed Wajeeh and the General Manager of CAMC Engineering Li Wei Wei.

Outlined within the agreement are details of six subprojects:

  • Launching offshore bunkering services
  • Developing a cruise terminal
  • Establishing a super yacht marina
  • Developing Gaadhoo as an Eco-resort
  • Establishing a facility to store regionally produced food items
  • Building a transshipment port

Providing insight into the developmental project, CEO Wajeeh underscored MPL’s ongoing efforts to secure a relevant market. He envisioned attracting international shipping lines to the transshipment port, anticipating a significant economic boost from even a single shipping line. Discussions are also underway with cruise operators to initiate cruise terminal operations.

MPL disclosed proposals from two companies to assist in providing bunkering services. While Vitol Bunkering, currently involved in developing bunkering facilities in Haa Alif Atoll, is one of them, the second company expressing interest hails from Dubai.

The establishment of a commercial port and a harbor including logistics is a commitment outlined in the governments’ manifesto.

Source(s): PsmNews

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