G7 Current Affairs - 2019

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PwC Global Economy Watch: Key Facts

The Global Economy Watch Report of PwC monitors trends and issues affecting the global economy and details its latest projections for the leading nations. The important facts from the 2019 report are listed below:

  • India and France are likely to surpass the UK in the world’s largest economy rankings in 2019, pushing it down to seventh place from fifth in the global table.
  • The report mentions that UK and France have regularly switched places owing to similar levels of development and roughly equal populations.
  • The report mentions that India is the fastest growing large economy in the world, with an enormous population, favourable demographics and high catch-up potential due to low initial GDP per head. It is therefore certain for India to continue to rise in the global GDP league table in the coming decades. Hence India’s rise in the rankings is likely to be permanent.
  • The report projects real GDP growth of 1.6 per cent for the UK, 1.7 per cent for France and 7.6 per cent for India in 2019.
  • India would return to a healthy growth rate of 7.6 per cent in 2019-20 if there are no major headwinds in the global economy such as enhanced trade tensions or supply-side shocks in oil.
  • India’s growth will be supported through a further realisation of efficiency gains from the newly adopted GST and policy impetus expected in the first year of a new government
  • The global economy as a whole is expected to slow in 2019 as G7 countries return to long-run average growth rates after a mini-boom witnessed between the end of 2016 and early 2018.
  • The global trade conflicts will deepen in 2019. The main focus of tensions is likely to remain US-China trade and there will always be the risk of this escalating into a wider trade conflict and businesses.

The report calls to plan accordingly to address the scenarios. This may result in uncertainty for policymakers and businesses.

World Bank launches Pandemic Emergency Finance Facility

The World Bank has launched Pandemic Emergency Finance Facility (FEP) to help countries and health agencies fight deadly disease outbreaks.

FEP is a financing mechanism designed to quickly mobilize funds to tackle global disease outbreaks and create a new insurance market for pandemic risk.

It was unveiled at the G-7 Finance Ministers Summit held in Ise-Shima, Japan. Japanese Government has committed to donate $50 million dollars to it, becoming the first donor.

Key facts

  • It was designed and built by World Bank in collaboration with the World Health Organization (WHO) and the private sector reinsurance companies etc.
  • PEF is meant to work almost like an insurance policy, but it will be mainly to protect against deadly disease outbreaks by ensuring “surge funding” to response efforts.
  • The funding will be disbursed according to a complex trigger mechanism and activation criteria based on four categories of infectious diseases.
  • It will provide coverage up to US 500 million dollars for outbreaks of infectious diseases most likely to cause major epidemics for an initial period of 3 years.
  • The major epidemics covered under PEF include new influenza pandemic virus A, B and C, MERS, SARS, Ebola, Crimean Congo, Marburg, Rift Valley, Lassa fever, etc.
  • The insurance window under it will combine the funding from the reinsurance markets with the proceeds of catastrophe or Cat bonds (World Bank issued pandemic bonds) as well as a complementary cash window.
  • It will be for the first time World Bank Cat Bonds will be used to combat infectious diseases.