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Testing the Resilience of the Turkish Cypriot Economy: A Macroeconomic Monitoring Note - Special Issue : Enhancing Competitiveness and Promoting Economic Integration(World Bank, Washington DC, 2022-03) World BankThe Turkish Cypriot economy (TCe) has struggled to recover since the onset of the COVID-19 pandemic in early 2020. With a contraction of 16.2 percent in GDP in 2020, when the COVID-19 pandemic first took hold, the TCe experienced the most severe recession in its history, and the most severe recession among the economies of Europe. Moreover, just as other economies were beginning to recover, in 2021 the TCe underwent a phase of exceptional political uncertainty and numerous exogenous shocks, testing its resilience. With the emergence of new variants of the virus, the COVID-19 pandemic continued to adversely impact the TCe throughout 2021, with cases reaching a new peak at the end of 2021 despite the Turkish Cypriot (TC) administration’s efforts to prevent the spread of the virus, together with its support for the health system, households, and companies. Furthermore, a new record low in average precipitation in 2021, a series of earthquakes at the beginning of 2022, and weak energy security, with a recent series of power outages experienced across the island, have all revealed the intrinsic vulnerabilities of the island to climate change and natural disasters. Building a competitive private sector would require reforming business regulations and procedures that are under the mandate of the TC administration, and that should be aligned with international best practices and the EU Acquis, irrespective of the broader context of the political economy. Special attention should be devoted to the regulation concerning imports and GL trade. Pre-permits and licenses imposed by the TC administration on imports, on top of regulatory uncertainty and other cumbersome procedures, contribute to increasing prices, penalizing consumers, and eroding domestic competitiveness. A dialogue framework between GC and TC private sectors could be established to support solutions to the long-standing constraints that have been impeding business cooperation across the GL, for the benefit of all Cypriots.
Publication(Washington, DC: World Bank, 2022-02-01) Ranger, Nicola Ann ; Mahul, Olivier ; Monasterolo, IreneClimate change has become a main concern of ministries of finance, central banks, and financial regulators. In response, a suite of scenarios and tools have been developed tthe potential scale of climate risks and underprice investments in resilience. This is particularly important for emerging markets and developing economies where exposure to physical climate risks is already high and is expected to further increase with climate change. The paper identifies five areas, or risk drivers, that make a material contribution to physical climate risks to the financial sector and that are not consistently included in current scenarios and tools: (1) extreme weather events; (2) uncertainties in climate models; (3) compound scenarios; (4) indirect economic impacts of shocks; and (5) feedback between the real economy and the financial sector. We derive a framework for generating scenarios to assess acute physical climate-related financial risks, which is inspired by the “Realistic Disaster Scenarios” that are used in risk management and supervision in the insurance sector. The framework is illustrated through an application of the EIRIN macroeconomic model. This framework aims to complement recent work by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) and the Financial Stability Board (FSB) to inform ministries of finance, central banks, financial regulators, and financial institutions on climate financial risk assessments, both for micro- and macroprudential risk management, and to incorporate climate risks into wider financial decision making and disclosures.o assess the financial risks from physical climate shocks (for example, hurricanes, droughts, wildfires, flooding). However, those scenarios do not fully capture such shocks, which could lead financial institutions to underestimate.
Publication(World Bank, Washington, DC, 2022-02) World BankThis report presents a qualitative review of inclusive approaches to disaster risk management (DRM)—a part of the first stocktaking exercise that the Global Facility for Disaster Reduction and Recovery (GFDRR) conducts to assess lessons learned and generate knowledge to help mainstream inclusive approaches and strategies across GFDRR activities. The findings are based on a literature review, analysis of portfolio data, and internal consultations with World Bank task team leaders of GFDRR-funded activities. The reviewed literature includes GFDRR project documentation and knowledge products, World Bank operational documents and research findings, and relevant publications from other scholars and organizations. The stocktaking exercise emphasizes gender, disability-inclusive DRM, citizen engagement, and community participation. It will help create a framework for GFDRR engagement on inclusive DRM and inform development of an inclusive DRM work plan for implementation beginning in fiscal year 2022. As such, GFDRR’s work in these areas reflects its commitment to the World Bank Group’s Gender Strategy 2016–2023 (World Bank Group 2015), the Disability Inclusion and Accountability Framework (World Bank 2018), and the Strategic Framework for Mainstreaming Citizen Engagement in World Bank Group Operations.