Finance

The eight-year conflict in Yemen between the government and Houthi rebels that has devastated the population may end due to provisions in the peace agreement reached by Saudi Arabia (which backs the government) and Iran (which supports the rebels). A cessation of fighting would be a major first step in repairing Yemen’s battered economy.

One victim of the pandemic was the smooth functioning of global supply chains. Recent geopolitical conflicts have only worsened the situation. Some contend that friend-shoring is the answer, with partners trading with others that share similar political views. But are there risks from the world fragmenting into compatible trade alliances?

The Arctic region, with its diverse natural resources, boasts the planet’s greatest untapped economic potential and is drawing the keen interest of the world’s top political powers, many of which are included in the eight-member Arctic Council. Its strategic military location is also attracting attention as the second Cold War intensifies.

On January 10th 2023, the Bank of England’s Prudential Regulation Authority (PRA) wrote to chief executives of financial services companies setting out its “planned work” for the year ahead. Operational Resilience was a key theme, and there is no doubt the regulators are going to get much tougher when it comes to the robustness of the impact tolerance performance around critical services.

Solutions for Haiti, struck by several crises, seem scarce. While aid agencies and diplomats have offered suggestions, gang violence, natural disasters, raging inflation and disease outbreaks are conspiring to maintain the grim outlook. Its unelected government may not be equipped for the challenges, but how far should other countries go?

Latin America’s tepid economic growth limits its ability to address pressing social issues. What must be done to elevate its growth rate, resilience to future shocks and response to climate change? Three required measures are increased competition, improved capacity for firms to profit from this competition and fortified financial markets.

The errors of others can be good teachers. As many countries fight inflation by raising interest rates, Argentina’s financial system offers valuable lessons and highlights avoidable pitfalls in managing monetary policy. Trapped in a loop of high inflation and government debt and low credit and growth, Argentina exemplifies what not to do.

China’s ascension to prominence as one of the world’s two economic superpowers has been accompanied by its rise in diplomatic intermediation, aided by its extensive Belt and Road Initiative. Its recent successes in the Arab region underscore the global power centre’s shift eastward, not boding well for the petrodollar’s continued dominance.

As the world battles multiple crises, effective macro-fiscal policy is paramount—and not only to alleviate short-term crises. A medium-to-long-term strategy that addresses fiscal and economic vulnerabilities while fostering sustainable growth is needed. What principles should policymakers follow to formulate forward-looking fiscal policy?

Banks, instrumental in the net-zero transition, are not alone in the journey, with organisations such as the Task Force on Climate-related Financial Disclosures and Sustainable Markets Initiative offering guidance. How can banks evaluate their existing asset-portfolio risks while meeting financing requirements and shareholder expectations?