How Lao PDR Can Connect Health, Environment, and Economic Recovery
To mark the International Day of Clean Air for blue skies, the World Bank is publishing a Country Environmental Analysis for the Lao PDR, analyzing how the country can use its commitment to greener growth to stimulate economic recovery from the current slowdown, and to improve health across the Lao population.
The theme for this year’s Clean Air Day is “Healthy Air, Healthy Planet”, emphasizing the huge impact of air pollution on human health aspects, especially considering the COVID-19 pandemic. The new World Bank report investigates the causes and effects of air pollution in Laos. Household air pollution in the country is mainly caused by solid fuel for cooking, traditionally carried out by women, and contributes to the high rate of respiratory diseases. Outdoor air pollution is rising as more vehicles take to the roads, smog builds up in the agricultural burning season, and coal-fired power stations are built.
The report applauds the Lao approach to identifying priority challenges and opportunities for moving to greener growth and recommends that other countries learn from this. It acknowledges the Lao government’s commitment to a new economic model that can preserve the environment and strengthen resilience to natural disasters and economic shock. This shaped the country’s National Green Growth Strategy, adopted in 2019, and can now provide a fundamental pillar of the strategy for bouncing back from COVID-19. The pandemic and associated economic crisis underscore the need to accelerate the movement toward green growth to support sustainable and inclusive recovery, with scarce resources prioritized for the most urgent challenges.
Pollution is a public health major risk that slows economic growth. Environmental health risks result in around 10,000 deaths each year — over 20% of total deaths in Laos — and cause more than 100 million days of illness. The annual economic cost is estimated at nearly 15% percent of GDP. Pre-existing health conditions such as heart or respiratory problems, which make people more vulnerable to COVID-19, can be caused or worsened by airborne or land-based pollution.
Meanwhile the depletion of the natural resources that fueled much of Lao PDR’s economic growth over the last 20 year robs populations of opportunities to meet their own needs, while also increasing vulnerability to extreme weather events. Until recently, forest loss and degradation cost the country nearly 3 percent of GDP per year. The poor are disproportionately burdened by environmental pollution and degradation.
The new Country Environmental Analysis also cites various successful practices from around the world, and data from local research, that can inform policies for greener growth and pollution control. It suggests ways of tackling Laos’ most serious environmental health risks, plus further strategies for bolstering the rural economy amid a changing climate and strengthening warning systems against natural disasters.
Worries over economic recovery shake world stocks, dollar gains
Global indices are displayed on a screen on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 19, 2021. REUTERS/Andrew Kelly/File Photo
HONG KONG, Sept 8 (Reuters) - World stocks edged away from the previous session’s record highs and European stocks dropped on Wednesday on uncertainty over the pace of economic recovery, while the dollar hit one-week highs as investors reduced exposure to riskier assets.
U.S. S&P futures eased 0.1% after the S&P 500 fell 0.34% on Tuesday.
Accommodative central bank policies and optimism about reopening economies have pushed equities to record highs but concerns are growing about the impact of rising coronavirus infections due to the Delta variant.
Markets are also still assessing data from last week which showed the U.S. economy created the fewest jobs in seven months in August, and wondering how the U.S. central bank will respond.
The Fed should move forward with a plan to taper its massive asset purchase programme despite the slowdown in job growth, St. Louis Federal Reserve Bank President James Bullard said in an interview with the Financial Times on Wednesday.
“Everything is tapering, tapering, tapering. We are looking at every single central bank - when is the next one?” said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: “The Delta variant impact is still running like a wild card”.
MSCI’s world equity index fell 0.17% after seven consecutive days of gains.
European stocks hit their lowest in nearly three weeks and were down 0.69%. Britain’s FTSE 100 struck two-week lows and were down 0.56%.
“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Fed officials John Williams and Robert Kaplan speak later on Wednesday.
In Europe, markets are focused on whether the European Central Bank will this week begin to scale back its bond purchase programme.
The dollar hit a one-week high against the single currency and was trading at $1.1819. It also reached a one-week peak against an index of currencies, recovering from recent five-week lows. It was trading at 92.67 on the index, up 0.15%.
Yields on 10-year Treasury notes fell to 1.3529% compared to a U.S. close of 1.371% on Tuesday, retreating from this week’s eight-week highs. Germany’s 10-year Bund yield also hit eight-week highs before edging lower to -0.331%.
“Fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade,” Deutsche Bank analysts said in a note.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.45%, having risen in each of the past eight sessions.
Chinese blue chips dropped 0.41%, weighed down by recent soft data in the world’s second-biggest economy.
But Japan’s Nikkei jumped 0.89% to a five-month high, helped by revised gross domestic product growth figures beating expectations.
Bitcoin paused for breath after plunging 17% on Monday to a low of around $43,000 before recovering. It was last at $46,532, down 0.71%.
U.S. crude oil jumped 1.38% to $69.30 a barrel and Brent crude rose 1.14% to $72.50 per barrel, with prices supported by a slow restart to production in the Gulf of Mexico after Hurricane Ida hit the region.
Gold gained 0.17% to $1796.90 per ounce in line with the risk-averse mood and just below the psychologically key $1,800 level which it fell through in the previous session.
Editing by Kenneth Maxwell & Shri Navaratnam
Our Standards: The Thomson Reuters Trust Principles.
Global gas price surge threatens to dent the economic recovery
Global gas price surge threatens to dent the economic recovery
Supply shortages could lead to blackouts, while unaffordable electricity prices might crimp household income and spark social unrest in developing countries
By Stephen Stapczynski, Vanessa Dezem and Catherine Bosley / Bloomberg
Natural gas prices are undergoing a historic surge, and it is bad news for everyone from ceramic makers in China to customers of patisseries in Paris.
The cost of the fuel is already at record seasonal highs in most major markets and looks likely to rise further, threatening to dent the recovery from the COVID-19 pandemic.
The coming winter might give the world a painful lesson in just how pervasive and vital gas has become for the economy. Unaffordable prices could crimp households’ spending and erode their wages through inflation, giving central bankers some difficult policy choices.
Tugboats direct a liquefied natural gas tanker toward a thermal power station in Futtsu, Japan, on Nov. 13, 2017. Photo: Reuters
Worse still, actual supply shortages could idle swathes of industry, or even trigger blackouts in developing countries, potentially causing social unrest.
“Energy lies at the base of an economy,” said Bruce Robertson, an analyst at the Institute for Energy Economics and Financial Analysis. “High energy prices reverberate through the supply chain” and could dent the nascent recovery, he said.
Energy costs are rising around the world as the recovery in demand from the worst of the COVID-19 lockdowns collides with supply constraints. Oil has already undergone a long rally that started late last year and ended at multiyear highs above US$75 a barrel in July.
Gas began to rise in earnest at the start of summer in the northern hemisphere, when it became increasingly clear that there was not enough supply in Europe to allow the usual refilling of storage sites depleted in winter. The continent’s largest supplier, Russia, has been limiting pipeline exports due for a number of reasons including high domestic demand, output disruptions and an agreement to transit less of the fuel through Ukraine.
“We’ve been running behind the storage delay all summer,” said Alfred Stern, chief executive officer of Austrian oil and gas producer OMV AG. Consumers in Europe are now at the mercy of the weather and the trajectory of prices “will now depend on how cold this winter is.”
In Europe, the price of gas has since surpassed oil, but the problem is not contained within the region.
While the Russian supply constraints do not directly affect consumers in Asia, they must still compete with Europe for seaborne shipments of liquefied natural gas (LNG), forcing them to pay higher prices to secure deliveries.
“High gas prices today are a problem for Europe,” Francesco Starace, the chief executive officer of Italian utility Enel SpA, said in an interview on Bloomberg TV on Friday. “They might be a problem for Asia too.”
The LNG market is what connects Europe, Asia and the US, and high prices there feed through to the domestic US market by stimulating greater exports of the super-chilled fuel. Natural gas futures in New York have risen 80 percent this year to highest since 2018, although they are still far lower than in the other major global markets.
“The European market and the American market are in a similar place heading into the heating season,” said Nina Fahy, a natural gas analyst at Energy Aspects Ltd in New York. “We could potentially have storage adequacy concerns if we have colder-than-normal weather, given how high LNG exports are expected to be.”
DAMAGED INDUSTRIES
Around the world, the economic consequences of the natural gas rally are becoming evident.
Tereos SCA, the biggest sugar producer in France, said last month that the price of the fuel is affecting sugar processing in Europe, increasing production costs “tremendously,” according to a copy of an e-mail sent to clients and seen by Bloomberg News.
High energy prices are creating “inflationary pressure on every other cost” that will end up being passed on to customers, said Pascal Leroy, senior vice president of core ingredients at Roquette Freres SAS, a food processing company based in northern France.
In China, the world’s largest gas importer, ceramic factories have been forced to reduce output due to high prices in Guangdong and Jiangxi provinces, according to local reports.
Surging utility bills have “sabotaged” the business of Mughal Steels in Pakistan, chief operating officer Shakeel Ahmad said.
“We consume the gas first and get a high bill later,” he said. “How can I go back to a client saying that I need to add extra cost to the steel that I sold you?”
JPMorgan Chase & Co said this week that its index of global manufacturing managers fell to a six-month low last month, although it still indicated expansion.
Some poor countries, like Bangladesh, cannot afford to procure enough energy supplies to keep their economies buzzing. Some irrigation systems in the country might only run at night because of potential power rationing, people surveyed by Bloomberg said.
Current LNG prices in Asia are “absolutely not normal,” said Leonid Mikhelson, chief executive officer of Russian LNG producer Novatek PJSC.
“There may well be refusals” from customers that can’t afford it, he said.
US manufacturers have yet to see a big hit from the rising cost of gas, because many energy-intensive industries like steel and petrochemicals have also seen the price at which they sell their products surge, Fahy said.
ECONOMIC RIPPLES
A crisis that is largely playing out in heavy industry in Europe and Asia today could soon spread to the political and macroeconomic arenas.
If households and businesses see their utility bills rising, they might seek to push up wages or the price of the goods they sell, compounding the inflationary pressure already resulting from strained supply chains.
The headline rate of inflation in the euro area has already surged to a decade-high of 3 percent.
European Central Bank officials insist that this post-pandemic spike should prove temporary, but a lasting pickup would complicate their ability to keep supporting the economy through ultra-easy monetary policy.
“The likelihood that the producers pass on the costs is very high,” said Carsten Brzeski, an economist at ING Groep NV in Frankfurt. That means inflation might “not be that transitory.”
A lasting period of rising prices for the cost of essential goods can have social consequences.
“In many emerging market economies, even slight increases in retail fuel or energy prices can lead to economic hardship and public unrest,” Eurasia Group analysts said in a note dated on Tuesday.
In Pakistan, the government has come under fire for purchasing the nation’s priciest LNG shipments since they began importing the fuel in 2015.
The cost of energy could become a “hot potato” in the upcoming German election, Saxo Bank A/S head of commodity strategy Ole Hansen said.
“Public opinion is not yet focused on” rising energy prices, said Julien Hoarau, head of Paris-based consultant Engie EnergyScan. “But at some point, public opinion will react and will start questioning: ‘What is going on here?’”