Archive for category: Economy

Information and stories about economy.

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Updates on SDG 8 in Cuba

Updates on SDG 8 in Cuba
The United Nations (U.N.) Division for Sustainable Development Goals grades member countries on 17 Sustainable Development Goals (SDGs). One can discover the most direct links to potential poverty in a country by analyzing the economy and labor market. The Sustainable Development Report from May 2022 provides updates on SDG 8 in Cuba.

What is SDG 8?

SDG 8 focuses on economic growth and decent work. The factors that influence updates on SDG 8 in Cuba include the country’s gross domestic product (GDP) growth, the unemployment rate, potential victims of modern slavery and “fatal work-related accidents embodied in imports.” Previous updates on SDG 8 in Cuba also showed progress. Both the 2020 and 2021 Sustainable Development Reports showed that Cuba had met SDG 8 and maintained it.

How Did Cuba Do?

The most recent updates on SDG 8 in Cuba come from the 2022 report, which once again, shows Cuba achieving the goal despite economic setbacks in recent years.

In the last decade, Cuba’s gross domestic product (GDP) averaged a growth of about 2% a year, according to the World Bank. The Caribbean island nation’s GDP had not seen negative growth in the 21st century until a slight dip in 2019. Like most countries, the COVID-19 pandemic caused a steep drop in GDP in 2020. After recording a -10.9% GDP in 2020, Cuba rebounded slightly in 2021 with a 2% growth in its economy.

The unemployment rate in Cuba is also relatively low, only hitting 3.87% in 2020.  The 2022 Sustainable Development Report places Cuba’s unemployment rate at 2.5% in 2022. Trading Economics predicts that, by 2023, the unemployment rate will drop to 2.2%.

According to the Sustainable Development Report of 2022, 3.8 out of every 1,000 Cubans fell victim to modern slavery. This number likely links to accusations of modern slavery against Cuba in relation to the nation’s international medical outreach program. The most recent allegations pertain to doctors, with the U.N. Human Rights Council’s rapporteur making an official inquiry in November 2019.

Based on reports from Cuban doctors themselves, the United States alleges that Cuban doctors working in other countries are overworked and endure underpayment in the international medical assistance program that brings billions to Cuba each year. The U.S. also alleges that Cuban doctors have to leave their families behind in Cuba to discourage defection while abroad.

As for the factor of fatal work accidents embodied in imports, the 2022 Sustainable Development Report notes 0.2 per 100,000 Cubans. This data is consistent with the 2020 and 2021 reports, indicating stagnation in work-related fatal accident rates.

Potential Progress on SDG 8 in Cuba

One beacon of hope that Cuba is leaning toward to further its economic growth and recovery is the tourism industry. Despite the United States embargo from the Kennedy administration, Cuba used to welcome about 4 million visitors each year from across the globe before the pandemic.

As pandemic restrictions ease, the tourism industry is seeking to capitalize on increased travel. The Cuban government has dedicated 24% of its 2022 budget to tourism, focusing on building new hotel rooms as well as relying on entrepreneurs in the country to bolster the uptick in tourism to the island.

The United States easing travel restrictions to Cuba will help increase the number of visitors to the country. According to an announcement in May 2022, while U.S. citizens cannot travel to the island for tourism purposes, those traveling to Cuba for research or meetings can enter the country.

The State Department announced on May 17, 2022, that it will allow flights from the U.S. to land at other airports in Cuba going forward, lifting a restriction that only permitted flights to land at the José Martí International Airport in Havana.

Barring any unforeseen setback, Cuba expects to increase its GDP by 4% in 2022, according to Prime Minister Manuel Marrero in a report from December 2021. Cuba could maintain SDG 8 for next year by increasing GDP, keeping unemployment low and maintaining the improvements presented in the 2022 Sustainable Development Report. This would mark a small victory for a nation battered by economic stagnation and sanctions from its neighbor to the north.

– Emma Rushworth
Photo: Flickr

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Constructing the Thwake Dam in Kenya 

Thwake Dam in Kenya Severe, extended droughts and contamination due to runoff waste has impacted Kenya’s ongoing water crisis. UNICEF estimates that only 59% of Kenyans have access to clean water in 2022. While access to basic drinking water has increased in the last decade, Kenyans’ access to basic sanitation has decreased from about 34% to 29%. The Kenyan government and private sectors are working together on a multiphase project called the Thwake Multipurpose Water Development Program (TMWDP) in a reformative attempt to build rural water connections and deliver new economic opportunities to the country. Here is some information about the Thwake Dam in Kenya and how it will promote water security in the country.

The Thwake Multipurpose Water Development Program

The TMWDP efforts occur between Kenya’s Makueni and Kitui counties, which are among the areas that drought affects the most. The low annual average rainfall in the project zone is confirmed to be about 500 mm per year, which is a major factor driving unreliable water access. For the Kenyans in these areas, it is not uncommon to travel more than 10 km each day just to receive water for livestock and domestic use.

After receiving approval from the Kenyan government in 2013 under financing from the African Development Fund, the TMWDP offered a timeline consisting of four phases. The first and most crucial phase currently under process is the construction of the Thwake Dam, spanning 1.5 km along the merging point of the Thwake and Athi rivers that intersect Makueni and Kitui counties. In November 2017, the county governments of Makueni and Kitui contracted the Chinese Gezhouba Group Company (CGGC) to construct the dam.

The Thwake Dam, which the Kenyan government estimates will be constructed by the summer of 2022, will supply 150,000 cubic meters of water daily for more than 1 million Kenyans in Makueni, Kitui and Machakos counties. The dam will be a major contributor to completing phase 1 of the project, providing 681 million cubic meters (MCM) of water storage. Following phase 1, the project aims to increase water supply for human consumption by 34 MCM, for power and downstream irrigation by 625 MCM, and 22 MCM for upstream irrigation. African Development Bank Group President Dr. Akinwumi Adesina stated his support for the project while attending a celebration of Madaraka Day in Nairobi, Kenya, highlighting its ability to transform lives by providing electricity, water supply and irrigation to 40,000 hectares of land.

Benefits of the Thwake Dam and Kenya Vision 2030

The Thwake Dam is already proving to be beneficial for Kenya’s labor force where the majority of workers operate in the informal economy without secure contracts or benefits. The project has hired more than 1,100 local Kenyans for dam construction and sources materials like cement and steel from nearby industries. CGGC managing director Frank Keeh stated his support for socio-economic growth in Kenya, referring to the project as an “economic game-changer” for the people.

The TMWDP targets more than 1 million people who will benefit from the Thwake Dam once it is operational. In specific, the African Development Bank Group mentions the 674,700 Kenyans who live in rural Makueni and Kitui, as well as the additional 640,000 projected to live in Konza, described as a world-class city with a thriving information, communications and technology (ITC) sector. Similar to the Thwake Dam, Konza Technopolis is a flagship project of Kenya’s Vision 2030, a long-term development plan to create “a globally competitive and prosperous country with a high quality of life by 2030.” Both projects will help Kenya Vision achieve its goal of an average economic growth rate of 10% per year until 2030.

Looking Ahead

The Thwake Dam serves to benefit Kenya’s water-insecure regions to bolster sustainable and inclusive economic growth within the country. By supplying and storing over 681 MCM of treated water, the Thwake Dam will contribute to improving health care and sanitation across three counties. The dam will also promote the agricultural sectors by assisting in irrigation and combatting lengthy dry spells. The work done by the TMWDP acts as a pillar for Kenya Vision 2030’s goal to transform Kenya into an economically prosperous middle-income country by the end of the decade.

– Evan Lemole
Photo: Wikipedia Commons

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Handling Inflation in Uganda

Inflation In Uganda
Uganda is in a state of having to combat inflation and rising prices for its citizens as global events, such as the COVID-19 pandemic and the Russia-Ukraine war, continue to interrupt normal streams of trade and supply. As a result, Uganda’s government has already begun implementing actions and constructing a broad policy that seeks to help keep the negative effects of inflation from causing more economic instability in the future.

The Current Impact of Inflation

Uganda is a country that is heavily reliant on crude and other imported material in order to make necessities such as cooking oil and soap. The cost of gasoline went up by 32% by February 2022 and soap went up to 57% at the same time.

As a result of this influx of prices, the Ugandan monetary policy committee increased the interest rate benchmark from 6.5% to 7.5%. This is the first time the committee has increased the interest rate benchmark since 2018. This has come at a time when Ugandan citizens already face higher prices and taxes which will remain at the same rate.

Uganda’s leaders are taking these steps in hopes of counteracting the risks of further global complications. Whether it be recurring waves of COVID-19, the impact of the Russian invasion of Ukraine or rising prices, Uganda will continue to look to other methods of revitalizing its economy and keeping up the fight against poverty.

During the first wave of COVID-19 in 2020, poverty rates in Uganda went from 27.5% to 32.7%, with the employment rate going down during the second lockdown in 2021. These complications along with the increased oil and consumer prices could result in slow growth, below 6%, through 2023 and 2024 for the Ugandan economy. All of this highlights the need for more structural economic transformation and how inflation in Uganda will be tackled.

Ongoing Strategies

Though there are many obstacles to the ongoing development of Uganda, there is a myriad of programs, partners and policies that are also working towards a brighter future. According to the World Bank, the primary financial investment that is going into fighting poverty and inflation in Uganda is the International Development Association. It is offering a low service rate of 0.75% on disbursed credit with loan repayments stretched over 38 years. Major projects funded by the IDA in Uganda include The Electric Access Scale-Up Project ($568 million) which improves energy accessibility, Investment for Industrial Transformation and Employment ($200 million) and Additional Financing to Uganda COVID-19 Response and Emergency Preparedness Project ($164.3 million).

The aforementioned projects will seek to improve economic recovery for Uganda amid the COVID-19 pandemic by fortifying its public health and response institutions.

With funding continuing throughout the rest of the fiscal year 2022 through the IDA and government awareness of the issues at hand, there is hope that inflation in Uganda can subside eventually and allow citizens to enjoy the growth of the Ugandan economy. Despite complications due to global conflicts of war, supply interruptions, the COVID-19 pandemic and future uncertainty, there is hope for Uganda to become a prosperous economy by 2040, according to the World Bank.

– Albert Vargas
Photo: Flickr

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Planting Fruit Trees in Morocco Reaps Economic Benefits

Planting Fruit Trees in Morocco
Due to its geographical location, Morocco is susceptible to long periods of droughts and water shortages. The Moroccan government partnered with civil society to plant 800,000 trees by 2024 to improve climate issues and agriculture. As a country that experienced the unemployment rate rising to 12.3% in 2021, planting fruit trees in Morocco is one of the solutions to boost its economy by creating an oasis in the desert.

Reforestation in Morocco and its Benefits

Fruit tree planting in Morocco can reduce poverty by providing income for local farmers. There is a wide variety of fruit trees in the country ranging from olives, argan and dates to carob, cashew nuts and more. Its shallow, rocky soils and Mediterranean climate are perfect for these fruits to grow.

For example, the planting of argan trees has played an important role in improving the Moroccan economy. Argan extracted from the trees goes toward producing argan oil, which is rich in fatty acids and antioxidants and is designed for culinary, cosmetic and medicinal purposes. The demand for Moroccan argan oil is growing; the market for argan oil is expected to reach $262.4 million by 2025.

According to The National Agency for the Development of Oasis and Argan Zones, “The Gross Domestic Product (GDP) of oases and argan trees in Morocco increased from MAD 84 billion to MAD 129 billion (€7.88 billion to €12.1 billion) between 2009 and 2018.”

In addition, locals are able to receive jobs from the reforestation. It was uncommon for women in Morocco to work outside. However, to keep up with the growing business of argan from the planting argan trees, local women joined and changed the social perception about women’s roles within the society, improving the livelihoods of women in the region.

Charrouf, who established a movement of women cooperatives, told CNN how local women’s lives improved after the business. “Before they didn’t get any money, but now they have at least €100 ($108) per month,” she said. And they were very grateful because their children were finally able to receive an education by earning a decent wage.

Tree Planting Programs in Morocco

Two major organizations are providing programs related to planting fruit trees in Morocco. This ensures sustainable development and helps expedite the growth of its economy.

  • Reforest’Action — In 2017, it started running several projects with the Ibn Al Baytar Association across Morocco with the objective of promoting economic development through harvesting organic fruits. The organization made significant progress during the planting season from 2020 to 2021. It also helps raise awareness of planting fruit trees among local communities through participatory planting sessions.
  • High Atlas Foundation (HAF) — HAF assists local families by planting fruit trees through collaboration with communities. According to the HAF report published in 2021, “HAF-community collaboration has planted 700,000 trees of nine fruit varieties, with 6,000 farming families in 39 provinces.” The collaboration also planted 1.6 million seeds in 13 nurseries located in eight provinces.

Planting fruit trees in Morocco has brought economic benefits in a sustainable way. Local farmers and communities are able to generate income and enjoy self-sustainability through the programs assisted by the organizations. In the middle of the desert, an oasis is growing and benefiting the nation.

– Jiaying Guo
Photo: Flickr

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Inflation in Germany

Inflation in Germany
The month of April ended with one of the highest levels of inflation in Germany, with the inflation rate reaching 7.4%. and estimated to increase even more in May, potentially attaining 7.9%  or the highest rate in 50 years. The numbers can quickly become worrying, given that the purchasing power of the German people is decreasing, which puts additional pressure on the government along with the European Union to find solutions and get out of this crisis. Inflation in Germany is due to many external factors, not only affecting the country but the whole world. As always in times of crisis, the poorest are the most affected by the situation, waiting for their government to come up with solutions for relief.

Causes of the Inflation Increase

Among the most common causes of the increase in inflation rate around the world are the Coronavirus outbreak and the disruption in the supply chains it led to. Increasing the prices of goods, making them unaffordable for many people. More recently, the Russian-Ukrainian war had an important impact on the economy of European countries and especially Germany. In fact, Germany used to import 55% of its gas from Russia last year, which is not possible anymore given the sanctions the European Union placed on Moscow. This sudden cut in gas supplies became very problematic, leading to skyrocketing prices of oil, petrol and other energy products necessary for many aspects of people’s life. Similar to many other countries, the inflation in Germany is the result of consecutive crises creating disequilibrium in the economy of the country. However, Germany is more affected than others given its dependence on Russian oil and gas.

Effect of Inflation on the Poorest

While inflation in Germany is affecting everyone, the poorest, as often in times of crisis are those who struggle the most. The supermarkets must increase the prices of basic products such as meats or diaries, the increase generally ranges between 20% to 50%, making it impossible for people already in a delicate financial situation to keep the same living standards. Keeping the living standards has been harder since the increase in prices of food has accompanied skyrocketing prices of energy products. For example, in March the price of heating oil increased by 99.8% compared to last year. This drastic augmentation in prices of household necessities makes it more and more difficult for the lower income as well as the middle-income class to make ends meet.

With the timid increase in salaries barely keeping up with the increase in the living cost, one of 10 Germans are now using their savings and sometimes taking loans to be able to survive through this crisis according to a survey from April 2022.

Solutions

To get through the inflation in Germany, the state is coming up with different solutions to support its people. The lower house of parliament took some relief measures such as one-time payments to the poorest, a child supplement and reductions in electricity costs. The government also lowered taxes on fuel, making it cheaper for customers. The rise in energy prices would have potentially led to a cut in the investment of German companies, leading to closing businesses and increasing the unemployment rate. However, the actions the government took were enough to bring back the trust. Despite the crisis, the government expects the unemployment rate to decrease in 2022 going from 5.7% to 5% in one year, according to Reuters, which shows the strength of the German economy.

A Look Ahead

Hence, all the crises the world is going through, have an important impact on the inflation in Germany. However, the German economy showed once again its resilience while the German government took and is ready to take more measures to support its population during difficult times. This difficult period will also allow the country to start building its independence from foreign suppliers of basic needs.

– Youssef Yazbek
Photo: Unsplash

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The Effects of Sandstorms in Iraq

Sandstorms in Iraq
Over the past few years, Iraq has been through many sandstorms constantly increasing in intensity and frequency. In April 2022, the country recorded its ninth sandstorm in two months. An extreme weather situation that makes life even harder in a country that has experienced war and poverty. The government has not been taking proper measures for years to prevent his country and the Iraqi people from suffering from such conditions. The most recent sandstorms in Iraq touched six of 18 provinces, including the capital Baghdad. Living under a thick layer of dust has many consequences on people’s health, agriculture as well as the economic situation of the country.

Effects on Health

Health complications are among the most problematic effects of sandstorms in Iraq. While exposed to constant dust in their environment, the Iraqi people see their respiratory health seriously affected. The last sandstorm led to one death and 5,000 people hospitalized following respiratory complications. The high risk of suffering from breathing difficulties led the government to close schools and official institutions. The most affected groups are children and the elderly.

According to the WMO, exposure to dust particles during sandstorms can lead to diseases such as asthma or pneumonia but can also lead to cardiac issues. Moving in the air dust facilitates the transportation and thus the transmission of viruses and other bacteria. Hence, besides the effects the sandstorms have already on Iraq, some health consequences can develop and become problematic with time in a country with financial difficulties.

Effects on the Economy

Sandstorms in Iraq have also a terrible impact on the country’s economy. Among the most affected sectors is the agriculture sector. Previously one of the most prolific sectors of the country, living from agriculture became very difficult for farmers today. In fact, the extreme heat, lack of water and dust brought by repetitive sandstorms have ruined many of the crops strongly affecting the revenues of the farmers who are already struggling to make the ends meet.

This exceptional weather is also affecting merchants. However, for them to survive, they have to open their shops amidst the sandstorm, despite the government suspending working hours for everyone besides the medical field. Some of the merchants saw their sales decreasing given that the thick layer of dust wrapping the city discouraged people to go shopping outside. On another note, three of the Iraqi airports closed for several days due to the lack of visibility the sandstorm caused.

Facing Environmental Challenges

It is worth mentioning that despite the limited means and capacities of the Iraqi state and despite the COVID-19 outbreak and all the difficulties it brought to the health sector, the victims of respiratory diseases always had access to oxygen and proper medication. The government ensured that hospitals have abundant oxygen reserves in most affected regions. Ambulances were also positioned on all the streets to respond to any emergency.

Although being prepared to face medical emergencies is essential during these extreme conditions, thinking of how to prevent Iraq from facing sandstorms again in the future is essential. The ministry of agriculture announced a project supported by the European Union to improve agriculture and create new jobs. More than just opening new jobs, this project is a good start to preventing future sandstorms in Iraq, given that the increase of green areas decreases the frequency and intensity of sandstorms.

Sandstorms in Iraq are becoming a major problem the country must deal with, in addition to all the challenges it must face in terms of the poverty of its population. However, the Iraqi people are resilient and do everything to keep life going despite this extreme weather situation. Even the government is taking small steps to protect its people and their future.

– Youssef Yazbek
Photo: Flickr

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The Role of Oil in Algeria’s Economic Future

Algeria’s Economic Future
Algeria’s economic future looks bright as its role as a supplier of liquid crude oil has expanded amidst the shifts in European sourcing due to the Russian invasion of Ukraine. Algeria typically provides only 8% of natural gas for the European Union. However, the country is already taking steps to provide more oil as nations look to lessen their dependence on Russian oil. Such a change in supply could mean an economic boost, enabling Algeria to build future long-term renewable energy and labor markets.

Historical Context

Algeria is a country with a deep history of relying on its own resources and people to power its economy. Having internationally-recognized independence since 1962, Algeria has had to resort to its oil exports, internal agricultural labor and deals with neighbors such as Morocco and Spain in order to stay afloat. After former president Abdelaziz Bouteflika resigned in 2019, the old guard of Algerian leadership faced a new era in which the country’s non-oil industry required expanding and strengthening in order for its economy to have a bright future.

How Algeria’s Role is Currently Changing

Countries such as Spain, Italy, Greece and France are weaning off of Russian oil, while capital cities such as Madrid, Athens and Rome are currently setting up new energy provisions with Algeria.  In its most recent report, the World Bank noted that Algeria’s economy grew 3.9% bigger due to the extra demand for European oil alongside new construction and industrial activity. To maintain this continued growth Algeria’s leaders need to pay close attention to the possible obstacles.

In order for Algeria’s economy to find the funds to diversify its future economy, it must be able to provide more oil to European countries in the first place, an increase estimated at 12% to 38% of its current rate by the fall and winter of this year.  However, the state-run oil company Sonatrach is facing bureaucratic slowdowns, hacking to the refinery operations, and complications maintaining its already existing contracts.

In addition, there is a geopolitical complication in Algeria’s current status as a primary buyer of Russian weapons and arms, according to Modern Diplomacy.  If Russia can mitigate some of its lost oil revenue by increasing weapons sales to a growing Algerian economy, then European nations may turn away from contracting more oil supplies from Algeria.  These are complications that make Algeria’s economic future a tricky path of policy and economic landmines.

Possible Solutions

The primary solution for longer-term economic growth is to focus on building non-hydrocarbon industries with the profits from oil exports that could take place in the coming months. One major way to do this is for the World Bank to support further private sector projects related to agriculture, construction and development. In addition, Algeria could create stability in its current leadership by funding social programs, human rights protection and anti-corruption legislation. These measures could help prevent the widespread political uprising from citizens and extremist groups while keeping the leadership needed to maintain the centralized economy going.

According to Council on Foreign Relations, the U.S. role in Algeria’s economic future should be kept to a minimum of interference. Algeria is a nation that is very insistent on being self-sufficient and sovereign. In order for political and economic stability to succeed, U.S. measures need to include not sending more troops or intelligence to Algeria and instead diplomatic peers in order to better understand the needs and wants of the nation, CFR stated.

Algeria’s economic future looks bright when taking into account the post-COVID-19 recovery and the opening avenues for revenue to which Algeria can build a stronger, more diversified economy. This serves two primary purposes: keeping intact its sovereignty and forging a new path forward to end its long-tenured instability.

– Albert Vargas
Photo: Flickr

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Unveiling Italy’s Stimulus Package

Italy’s Stimulus
On May 1, Italy’s Prime Minister Mario Draghi announced the approval of the new economic stimulus package dedicated to minimizing the impact of the war in Ukraine on Italian citizens and workers. Italy has a heavy reliance on many imported Russian goods. Of all the European Union nations, Italy will likely face the worst economic growth and supply chain issues the country has seen for decades.

The Economic Difficulties Causing the Need for Italy’s Stimulus Package

Italy’s stimulus package comes to lessen the impact of the war in Ukraine. The Economist Intelligence Unit (EIU) makes economic growth predictions annually. After the beginning of the war, the EIU changed its forecasts. The original projection for Italy’s economy was a growth rate of 4.4% but decreased to 3.4% within three months. Due to the investments and changes Italy must make over the next few months to support its economy and citizens the stimulus package will be necessary to aid future economic growth and security.

Russia originally supplied around 40% of Italy’s gas supply. Italy is determined to lessen its dependence on Russian gas and had been looking to do so before the conflict, but the war has sped up the need for change. Italy is hoping to increase its reliance on Algeria for its gas supply. Still, additional factors are at play with the deal Italy and Algeria have struck. According to Politico, Algeria needs to update its infrastructure for the gas industry, as investments in that sector have been lacking. The need for gas most likely means Italy must be the primary investor in the industry to receive the amount of gas necessary to support the country’s needs.

One of the other sectors that the lack of Russian support will hit the hardest is the tourism industry. Italy’s tourism industry, which like that of most nations experienced a decline in tourist numbers during the COVID-19 pandemic, will not recover to its original numbers without the assistance of Russian tourists. Overall, Russian tourists are only a small percentage of Italy’s tourists, about 1.5%. However, their economic impact is still significant because of how much they spend. Russian tourists spend almost €1 billion in Italy in 2019, La Prensa Latina reports. Countless other Italian industries and business sectors will suffer due to Russia’s actions in Ukraine and the domino effect it has had on economies worldwide. Italian citizens will be incredibly grateful for the government’s quick moves to draft the stimulus package.

How is it Different from Past Stimulus Packages?

This new stimulus package is not Italy’s first. The government sent out the last of Italy’s most recent stimulus packages in March 2021 for €32 billion. Around €11 billion in that package went to companies that lost at least 30% of their income in 2020. Eight billion euros of the stimulus was for fighting poverty and supporting employment and those in unemployment too. The COVID-19 stimulus package allocated €900 million for seasonal workers and €5 billion for purchasing vaccines and unexpected additional health care costs.

Prime Minister Draghi said this about Italy’s stimulus package in 2021, “This decree is a significant and very coherent response to poverty and businesses, it is a partial response, but it is the maximum that we have been able to do,” Euronews reports. Italian absolute poverty decreased from 7.7% in 2020 to 7.5% in 2021, showing a positive trend and the overarching benefits of Italy’s stimulus packages.

Overall, during the COVID-19 pandemic, Italy spent more than €200 billion to counteract economic damages. Thankfully, by the end of 2021, Italy’s economy grew by 6.5%, having recovered from the worst of the financial crises that the pandemic initiated. Italy’s stimulus package in 2022 provides hope and expectations for a similar recovery despite the difficulties.

What Will This Stimulus Package Do for Italy?

Italy’s stimulus package in response to the war in Ukraine has various components, including individual bonuses of €200 to middle and low-income families. The package secures bank loans too and directs funds at supporting families struggling with the cost of living as prices skyrocket. One of the most burdensome costs internationally is the cost of gas. The Italian government extended the cut on rising gas prices. The prices cannot increase an additional 25 cents per liter (0.25 gallons) of gas until at least July 8, 2022, when the government hopes to have the rising prices under control.

Rising prices dramatically changed Italians’ ability to purchase construction materials. Thus, the Italian government is setting aside €3 billion to help the construction companies immediately battle these prices. According to Reuters, Italy’s stimulus package sets aside an additional €400,000 in grants and funding for guarantees on bank loans and grants for all types of firms and companies impacted by the sanctions on Russian companies and products.

The funding for most of Italy’s stimulus package comes from newly created taxes on energy companies. The taxes ensure that the burden of significantly increased prices does not fall on the individuals who have been struggling since the COVID-19 pandemic.

– Clara Mulvihill
Photo: Flickr

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Laos’ Development Into A Digital Economy

Digital Economy
Many consider Laos one of the poorest countries in its surrounding region. However, its economy has significantly improved in the last 20 years, slowly connecting to the rest of the world digitally, especially as businesses were forced to adapt during the COVID-19 pandemic. While Laos has made progress to develop a digital economy, it is still lagging behind as accessibility, quality and affordability are currently issues for its citizens. Thankfully, the Lao Ministry of Technologies and Communications has recognized the need for Laos to develop digitally. In fact, several sectors of the Lao Government are partnering with USAID to allow businesses to access the SMART UP e-learning platform to help enhance their digital literacy.

The Larger Issue

Laos’ lag in digitalization results in a lack of transparency, increased procedural hurdles for investors, high costs for business and lacking public-service delivery for the government. Laos ranks 154 of 190 in the World Bank’s Doing Business 2020 report as well as 117 of 132 in The World Intellectual Property Organizations 2021 Global Innovation Index. Around 80% of the country works for small and medium-sized enterprises (SMEs), in which an estimated 100,000 operate informally due to “time, fees and paperwork associated with registering.”

Much of this is due to the Lao PDR’s processes being inefficient, having higher costs and disincentivizing businesses to be part of the formal economy. During the COVID-19 pandemic, approximately 78% of children in urban centers and 87.5% of children in rural areas could not access schooling. Around 48.9% of the population remained offline at the beginning of 2020. With 37.6% of the current population in urban areas and 64.2% in rural areas, Laos needs to increase its digitalization for its own development and to catch up with the rest of the world.

Efforts to Create a Digital Economy

The Lao Minister of Technologies and Communications Boveingkham Vongdara has acknowledged Laos’ need to accelerate and move into digital transformation with sustainable development. He claims the ministry is “promoting local language and creation of digital contents by developing fonts and keyboards that support the Lao language for computers and mobile devices.”

The Department of Small and Medium Enterprises Promotion, Ministry of Industry and Commerce and the Lao ICT Commerce association partnered with USAID to launch the SMART UP e-learning platform to help SMEs enhance their digital skills. SMART UP has eight modules that aim to help provide skills to businesses to enhance and promote themselves. It should help with digital literacy to help businesses become agile in the current economic environment, as well as to respond to digital development challenges so SMEs can survive as well as create new opportunities. With SMART UP helping SMEs and entrepreneurs, it will also create more jobs and opportunities for Lao citizens.

Within the first month of the launch, 373 users registered to use the SMART UP platform including 109 for Basic Accounting for SMEs, 63 in Digital Marketing for SMEs, 43 for Introduction to Data Analysis for SMEs, 35 in Full Stack Development, 34 in Multimedia for SMEs and 34 for Introduction to Digitalization. As a result, many small business owners have had a stronger foundation of knowledge in a quickly changing business environment.

Looking Ahead

While the COVID-19 pandemic presented many challenges, it also presented opportunities for the Lao PDR to participate in the digital age and develop a digital economy. With its government recognizing the necessity for a digital economy and platforms such as SMART UP allowing citizens to become more digitally literate, Laos will elevate itself and create more opportunities for economic growth.

– Jerrett Phinney
Photo: Flickr

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How Bitcoin in Honduras is Aiding its Economy

Bitcoin in Honduras
Honduras has one of Central America’s most robust and fastest-growing economies. Still, there is no doubt that the nation has had its fair share of economic strife. In April 2022, a heavily tourist-populated region nicknamed “Honduras Prospera” legalized the use of Bitcoin and other forms of cryptocurrency. Honduras Prospera will serve as a trial for Bitcoin usage in Honduras, with expectations for future growth.

Economic Struggles in Honduras

Honduras’ economy has certainly had its struggles. Hopefully, by introducing Bitcoin in Honduras, the country’s economic struggles will diminish. In the pre-COVID-19 pandemic age, in 2018, at least 16.5% of Hondurans lived on less than $1.90 a day. Since 2019, two significant hurricanes and natural disasters have impacted the nation and exacerbated the number of people in poverty due to the pandemic and its effects. In 2021, the poverty rate reached 73% with the extreme poverty rate reaching 53%. That marks the highest poverty and extreme poverty rates in Honduras since 2005.

One of the primary reasons Honduras’ economy has struggled is its dependence on agriculture and trade with the United States. If either of these sectors struggles, the entire economy struggles. Honduras’ agriculture accounted for slightly less than 30% of the country’s workforce in 2019 and is responsible for at least 12% of Honduras’ Gross Domestic Product (GDP).

Honduras’s trade with the United States accounts for about 41% of all Honduran trade annually. At the end of 2020, the bilateral trade earnings were more than $9 billion with a surplus that unfortunately only favored the U.S. Despite the immense difficulties the country has experienced since 2019, Honduras’s economic projections have been optimistic, with expected annual economic growth of 4.5%. The acceptance of Bitcoin and cryptocurrencies in Honduras will allow that figure to increase by the end of the next fiscal year.

Benefits of Accepting Cryptocurrency for Honduras

Introducing Bitcoin in Honduras has many benefits for the Prospera region before the rest of Honduras follows suit. The usage of Bitcoin in Honduras aims to entice foreign investors and make tourist spending easier to facilitate. It is a move following the introduction of Bitcoin in El Salvador, one of Honduras’s neighboring countries. Bitcoin in Honduras and El Salvador, while likely to face technical challenges in the early stages, intend to bring new business opportunities across borders and in international markets.

Cryptocurrency and Bitcoin have significant potential for economic security and allow for lower transaction fees. The decreased costs will encourage foreign investors and encourage locals to make use of Bitcoin as well. The lowered fees will prove beneficial to those living in poverty as they work to avoid extra costs and fees. One of the greatest challenges to implementing Bitcoin and cryptocurrencies anywhere is the technological barriers many places face. These include setting up a digital wallet. However, as Honduras Prospera is a tourist destination and is prepared for technological changes, it is a perfect location for a test run of cryptocurrency use.

Having Bitcoin in Honduras will open the door for new employment opportunities and can diversify the financial foundation of Honduras’s economy. The diversification of Honduras’ economy will allow for future safety should its agricultural foundation falter or trade with the U.S. become too difficult.

Honduras’s Economic Future

People do not widely accept the idea of Bitcoin in Honduras, as the first rollout of Bitcoin and cryptocurrencies are only taking place in one region of the country. Hondurans are skeptical of the economic advantages of Bitcoin after seeing the difficulties El Salvador has faced in its first weeks of using the cryptocurrencies.

One of the best ways to bring about economic growth in Honduras is to increase economic competition in all regions of the country, especially in the rural areas. The rural areas of Honduras are the most likely to experience poverty. Plus, with the benefits of Bitcoin in Honduras, including the lower transaction costs, Bitcoin should be able to easily spread to the country’s corners. Bitcoin also allows for merchant protection. Given Honduras’ heavy reliance on trade and the international economies and markets, the success in the piloting of Bitcoin will create even more support for introducing Bitcoin to the area.

Honduras’ estimated economic growth has stalled at about 4% since 2020. Honduras is still struggling to rebuild its infrastructure and economy since the COVID-19 pandemic and natural disasters hit, making any efforts to fix the problems invaluable. With the benefits of Bitcoin in Honduras, many already are finding popular Bitcoins for use, and with the need for any economic recovery, expanding Bitcoin’s availability for use will likely receive significant support. There are many websites already helping Hondurans find the best Bitcoin or cryptocurrency to use and the first Bitcoin ATM opened in August 2021. The expansion of Bitcoin will lead to economic growth in Honduras. It might allow Honduras’s economy to exceed expectations for its annual economic growth, thus amplifying the impacts of cryptocurrencies.

– Clara Mulvihill
Photo: Flickr