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Recap 2021

First posted under Insights, needs to elaborated with an educational video. This is a special feature on 2021, kickstarts the first podcast on Social Impact Update from The middle Road. Do refer to the add on educational publication following this podcast. This is going to be a regular feature from The middle Road.

Note: GERD figures are in PPP$ (constant 2005 prices). Many of the underlying data are estimated by the UNESCO Institute for Statistics for developing countries, in particular. Furthermore, in a substantial number of developing countries data do not cover all sectors of the economy.

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# The Ongoing Pandemic 

2021 will go down as the fastest vaccine rollout, yet the vaccination against the novel coronavirus is riddled with vaccine inequality. The share of fully vaccinated people in low income countries still hovers around 4 percent. Compare this to ~70 percent fully vaccinated population in high-income countries and 72 percent in Upper Middle-Income countries as per data shared by Our World in Data as of 30 December 2021. As of today, the cumulative cases exceed 284 million, registered deaths overtaking 5.4 million with actual figures much higher than the reported figures. The emergence of Omicron further exacerbated the problem of global recovery. Omicron is now the most dominant strain in the US and has exploded in Europe. First reported in South Africa on 24 November 2021, the new variant accounts for 73 percent of cases as per the CDC report for mid-December. CDC’s national genomic surveillance efforts are statistically powered to detect a variant that is circulating at 0.1% with 99% confidence and can monitor changes over time. To know more confidence intervals, refer to the online courses’ statistics modules on The middle Road. Both the World Bank and IMF took out packages to fine-tune the global asymmetries caused to the pandemic. The World Bank Group has committed $157 billion since the beginning of the pandemic while IMF proposed a $50 billion plan in 2021 enabling social change impact within the global arena. This pandemic has seen upwards of $16 trillion stimuli, the largest amount in modern history to fight the novel coronavirus. African Development Bank and Asian Development Bank are other multilateral that stood out for their work during the pandemic. Asian Development Bank announced a $20 billion dollar to support its developing countries in April 2020 and the $9 billion APVAX vaccine initiative announced in December 2020 offers support for its member countries for an equitable and safe rollout of COVID-19 vaccines. According to many estimates, the COVID-19 crisis has caused the worst recession since World War 2 with Global Debt standing at $296 trillion by Q3, 2021, according to the Institute of International Finance. World Bank and UNESCO define learning poverty as children unable to read and understand a simple text by the age of 10. Based on a World Bank study, out of 720 million primary school children, 382 million of them are learning poor. Poor learning skills are one of the most significant barriers to eradicating poverty. The COVID-19 pandemic could increase an additional 72 to 454 million students into learning poverty. With prolonged school closures, learning poverty would prevail in about 70 percent of low- and medium-income countries. 2021 saw continued refugee crisis. According to UNHCR 35,000 refugees are uprooted in Sudan; Afghanistan faces an economic collapse. 

Source: World Bank | Image The middle Road

Inflation Mother of All Headaches 

Inflation is one of the major concerns facing the world today. The middle Road was one of the first publications to point out inflation risk and has a detailed education video on this topic. Poor countries are the worst hit with food inflation rising due to supply disruptions. Example, sub Saharan region. Based on the IMF article, food accounts for 40 percent of the region’s CPI index, any increase in food prices increases inflation drastically. Food inflation was 11 percent from April this year till October. High oil prices, supply disruption due to the pandemic, export restriction by countries and stockpiling are the reasons that contributed to an increase in food prices. According to the IMF report, the percentage of undernourished people increased by 20 percent in 2020.

Check online courses for educational videos on Macroeconomics, Central Banks and Inflation.

# Sustainable Finance- Emergence of ESG

Climate Change and Action is a huge global issue, and sustainable finance is one of the enablers within this segment. European Union, a leader in implementing policies for a sustainable economy designated a corpus of  EUR 100 billion under the Multiannual Financial Framework (2021 to 2027) and Next GenEU (NGEU) for biodiversity projects.+ As global urbanization increases to ~50 percent, humanity is fast losing its touch with mother nature. The social costs associated with loss of the biodiversity-ecosystem are difficult to measurable with IMF estimates of global subsidy from undercharging for energy and its environmental costs in 2017 alone a staggering $5.2 trillion, or 6.5 percent of world GDP.
The Sustainable Debt is expected to be ~$1.5 trillion in 2021 based on the Institute of International Finance. Sustainable Bonds that are a subset of Sustainable Debt stood just shy of the $1 trillion mark. According to ING, in 2021 €875 billion (approximately $994 billion) of bonds were issued in all currencies where the use of proceeds was linked to green, social, sustainable, and SDG frameworks. Climate Bonds Initiative estimates green bonds issuance will trillion in annual issuance by 2023. The green bond market remains the most dominant within this segment, a key innovative feature to emerge in recent times is SDG linked bond. Transition bonds are another class of debt instrument used to finance decarbonization among high carbon-emitting industries. The SARS-Cov-2 has enhanced the issuance of social bonds as a vehicle to deliver social change and impact for the underserved and less privileged segment of society.

Graph: Source Climate Bonds Initiative : The middle Road

Asian Development Bank estimates that Asia and the Pacific will need to invest $1.7 trillion per year to support climate and sustainable development goals. Enel, a European multinational is a pioneer in issuing SDG-linked bonds, with coupon payments linked to sustainable development goals. Enel established a Sustainability-Linked Financing Framework to aid issuance of Sustainability-Linked Financing instruments for its Euro Commercial Program. The financing instrument targets Sustainable Development Goal 7 on Affordable and Clean Energy (SDG 7). These bonds have a step-up coupon feature i.e. they have to pay a penalty for missing the key performance indicator mapped to coupon payment. Refer to publications and articles on Sustainable Finance on to get in-depth knowledge on Sustainable Bonds. If Denmark is a champion of implementing best sustainable practices example promoting cycling as a mode of transport, then Singapore’s 2030 Green Plan is an inspiration for thought leadership within the sustainable development sector. The middle Road envisions Singapore’s 2030 Green Plan to a bell weather effort comparable to the Finland’s or better Nordic countries holistic foray in bettering K-12 education globally. The little Asian dynamo, Singapore plans to invest 50 percent more (200 hectares) of land for nature parks as part of its biodiversity drive. The fact that every household will live within 10 minutes of walk to a park, has numerous positive externalities example healthier life, lower healthcare costs, better wellbeing, more productivity at work, etc. The country is increasingly deploying circular economy solutions and by 2030, expects to reduce waste to landfills by 30 percent. Many ground-breaking initiatives like expanding the cycling network to 1320 km and raising the share of public transportation to 75 percent by 2030 can serve as a beacon for other countries in implementing and understanding impact evaluation to foster a greener tomorrow.

Listen Notes

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# COP26

The 2021 UN Climate Change Conference; Conference of Parties known as COP26 took place in Glasgow this year. The conference committed to limit the temperature increase to 1.5 °C above pre-industrial levels understanding the impact of climate change would be much lower at these levels compared to the 2 °C agreed under Paris Agreement. At the summit, leaders from more than 120 countries representing about 90 percent of the world’s forest pledged to halt and reverse deforestation by 2030. The $100 billion climate finance contribution pledged every year at COP9 held at Copenhagen summit, Denmark is puny when compared to the $5.2 trillion post-tax energy subsidies roughly (0.37 percent of Global GDP in 2017) based on IMF estimates. The coming together of more than 500 global financial services firms to commit $130 trillion roughly 40 percent of the world’s financial assets for climate change aligned with the Paris agreement and limiting global warming to 1.5 degrees Celsius helps to override the financial gap discussed earlier in implementing sustainable development goals per year. COP26 emphasized collaboration and the importance of civic societies in limiting loss due to climate change and promoting the Paris agreement through various actors’ example indigenous people and local people for effective implementation of the climate change agenda.

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# Science & Technology 

In 2021, the United States and China landed a rover on MARS, a fantastic achievement in the realms of space exploration. Space travel got a boost this year with space exploration by Virgin, SpaceX, and Blue Origin. UNESCO is a leading publication that discusses the interaction of science, its transition towards a greener, digitally connected society and public policy? In the last few years, the world has made critical progress as digitalization and technology penetrate our lives. But has the technology created an inclusive society? How has gender parity been measured over these years? How are different countries measuring comparatively on the research and innovation parameters? UNESCO Science Report: the race against time for smarter development tries to address these questions. The framework of seventeen sustainable development goals is a critical enabler for social change and impact catalyzing far-reaching synergies between multiple actors within the global arena. UNESCO report targets —- policymakers, intergovernmental and non-governmental entities, academicians, media, and other actors to understand the pathways of different geographical regions in their journey for a better- networked tomorrow. These pathways include asymmetries and distortions leading to prevailing inequalities within the global ecosystem. For example, 80 percent of the countries covered spend less than 1 percent of their GDP on Research and Development. A sound R&D is the backbone of a more responsive and just society but only 32 countries raised their research spending by 0.1 percent of GDP or more between 2014 and 2018. As technology sophistication increases over time, a more prudent approach for wellbeing and economic growth is to increase focus on R&D, quality education, and equitable healthcare. These initiatives drive gender equality, reduce the unemployment rate and increase productivity over the long run. 2021 will also go down in history books, as the year scientists discovered the first millipede in the world having 1306 legs in Australia. A soft yet significant discovery. Did you know, according to the World Bank, 1 million out of the present 8 million animal and plant spices are facing extinction.

Gender Equality is one key area where a lot of progress has been made in many countries covered. Globally, women have achieved parity (45–55 percent) at the bachelor’s and master’s levels of study and 44 percent at the Ph.D. level but the parity reduces as women pursue their careers. Women are also gaining in research as a profession; women researchers were one-third of all researchers in 2018, up from 28.4 percent in 2013.

# Person of the Year 2021 – Art of Subtlety

The middle Road awarded Simone Biles and Naomi Osaka as Person of the Year, for their tremendous contribution in defining the Art of Subtlety, a metaphor for measuring substance and character. Allison O’Donnell’s role in Shetland or Carey Mulligan’s role in Collateral exemplifies this attribute. As social upheaval continued in many parts of the world, the Art of Subtlety emerged as the central Tenet of 2021.

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