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Precious metals outlook: regaining lustre?

Wee Chian Koh's picture

This blog is the ninth in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs are here.
The World Bank’s Precious Metals Price Index is forecast to decline marginally in 2019, following an expected 2 percent loss in 2018. Gold prices are projected to edge marginally lower and silver prices to tick slightly higher, while platinum prices are anticipated to rebound moderately. Key risks to this outlook are U.S. monetary policy, the strength of the U.S. dollar, and global demand.
Precious metals price index

Sandbox or Quicksand?

Sharmista Appaya's picture
The financial system is going through a period of rapid innovation that is disintermediating the financial services value chain. This can have significant benefits for financial inclusion- providing access to, and enabling active usage of, affordable financial products and services to all individuals while supporting a diverse and competitive marketplace.

Financial regulators around the world are looking for more flexible ways to engage with fintech companies while being mindful of the inherent risks. Although the importance of interacting with this sector is widely accepted, the most appropriate instrument to do so is still being determined.

A tool that has become increasingly popular and synonymous with innovation is the ‘Regulatory Sandbox’. While nuances exist, they are fundamentally a regulator-controlled environment that allows participants to test their products, services and business models. However, Sandboxes are only one of several tools that regulators can use and have both benefits and challenges associated with them.
Depiction of some of the different tools available to regulators to enable Fintech
Depiction of some of the different tools available to regulators to enable Fintech

What’s keeping Pakistan in the dark?

Fan Zhang's picture
 $18 billion in fiscal year 2015—that is 6.5 percent of the country’s economy.
Nearly  50 million Pakistanis still lack access to grid electricity. Power distortions cost Pakistan’s economy much more than previously estimated: $18 billion in fiscal year 2015—that is 6.5 percent of the country’s economy. Credit: Curt Carnemark/ World Bank

From 1990 to 2010, 91 million people In Pakistan received electricity for the first time.
And power outages across the country have gone down drastically over the past few years.
Clearly, Pakistan has achieved much progress in expanding its electricity access and production in recent decades.
However, nearly  50 million Pakistanis still lack access to grid electricity and the country ranks 115th among 137 economies for reliable power.
After peaking in 2006, per capita electricity consumption failed to grow for almost a decade, remaining only one-fifth the average for other middle-income countries in 2014.
To boost sustainable energy supply, Pakistan’s power sector needs urgent investments and reforms to target inefficiencies in the entire electricity supply chain.
Fittingly, my new report In the Dark analyzes what lies behind these inefficiencies and suggests relevant actions to improve the operation of power plants, cut down on waste and costs, and increase electricity supply in a cost-effective manner.
The study sheds new light on the overall societal costs — not merely the fiscal costs as in previous research — of subsidies, blackouts and other distortions in the power sector.
To that end, my team and I surveyed Pakistan's entire supply chain from upstream fuel supply to electricity generation, transmission and distribution, and eventually, down to consumers.
Put simply, the numbers we found are dire.
Power distortions cost Pakistan’s economy much more than previously estimated: $18 billion in fiscal year 2015—that is 6.5 percent of the country’s economy.
Problems begin upstream, where gas underpricing encourages waste and reduces incentives for gas production and exploration.
And with no recent significant gas discoveries, higher gas usage has widened the gap between growing demand and low domestic supply.
On top of that, the volume of gas lost before reaching consumers reached 14.3 percent in fiscal year 2015. By comparison, this number is about 1 to 2 percent in advanced economies.
Public power plants use 20 percent more gas per unit of electricity produced than private producers.
Poor transmission contributed to 29 percent of the electricity shortfall in fiscal year 2015, while weak infrastructure, faulty metering and theft cause the loss of almost a fifth of generated electricity.
Electricity underpricing and failure to collect electricity bills have triggered a vicious “circular debt” problem, leading to power outages.
A lack of grid electricity also leads to greater use of kerosene lamps that cause indoor air pollution and its associated respiratory infections and tuberculosis risks.
Lack of access to reliable electricity also adversely impact children’s study time at night, women’s labor force participation, and gender equality.
Connecting all of Pakistan’s population to the grid and increasing the supply of electricity to 24 hours a day would increase total household income by at least $4.5 billion a year and avoid $8.4 billion in business losses.

Missing in action: Where is the “demand” for jobs when we prepare for jobs?

Federica Saliola's picture

Are robots, friends or foes of the future of work? Automation is eliminating some routine jobs but, on the positive side, robots are good partners for workers engaged in tasks that demand analytical, interpersonal, and creative skills, as well as manual physical skills involving dexterity.

Higher education institutions as drivers of innovation and growth in Azerbaijan

Igor Kheyfets's picture
Azerbaijan Education

It’s a cold spring day in Baku, and several students from Azerbaijan State Oil and Industry University (ASOIU) are huddled around a laptop trying to project an image onto their classroom wall.
Once the image is projected, one of the students “writes” on the surface of the classroom wall – as he would on the computer screen – using customized software called CamTouch, which allows the user to turn any surface into an interactive “smartboard”. The student also selects an icon and virtually opens a document with the help of a special stylus.

Do Sociable or Higher-Achieving Peers Matter? Guest post by Román Andrés Zárate

Development Impact Guest Blogger's picture

This is the nineteenth in this year's series of posts by PhD students on the job market.

While sociable peers increase your social skills, higher-achieving peers do not improve your academic performance. That is the main conclusion of my job market paper.
As the world bends closer towards automation, social skills take a lead role on individuals' well-being and labor market success. According to Deming (2017), between 1980 and 2012, jobs demanding high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Similarly, a recent column by the Washington Post highlights the importance of social skills for team productivity and employment opportunities. It describes the results of Google’s Project Aristotle, which concludes that the best teams at Google exhibit high levels of soft skills, and particularly social skills. These include emotional safety, equality, generosity, curiosity towards the ideas of your teammates, empathy, and emotional intelligence
While there is extensive research on policies that improve academic learning, little is known about how social skills form. My job market paper addresses this challenge. I present the results of a large-scale field experiment at boarding schools in Peru. The intervention was designed to estimate social and cognitive peer effects. While other studies have exploited random assignment to dormitories and classrooms, I use a novel experimental design to generate large variation in peer skills. Specifically, I assign students to two cross-randomized treatments in the allocation to beds in a dormitory: (1) less or more sociable peers, and (2) lower- or higher-achieving peers. This design surmounts many of the challenges with traditional approaches to the study of peer effects (Manski, 1993; Angrist, 2014; Caeyers and Fafchamps, 2016).

Risk models and storytelling – learning from past disasters for a more resilient future

Emma Phillips's picture

In the early afternoon of September 3, 1930, the San Zenon Hurricane struck Santo Domingo, the capital city of the Dominican Republic. With winds of up to 250 kilometers per hour, one of the deadliest hurricanes ever recorded in the Atlantic pummeled the coastal city, destroying entire neighborhoods and claiming the lives of as many as 8,000 people.
What would happen if a hurricane of a similar magnitude hit Santo Domingo today? Nearly 90 years on, only the oldest Dominicans have any direct recollection of the devastation. For most residents of present-day Santo Domingo, the consequences of another cataclysmic hurricane making landfall near their city are hard to imagine.
Be it hurricanes like San Zenon or volcanic eruptions such as that of Mount Vesuvius, analyzing natural events that led to the major disasters of yesteryear can help us get a fuller grasp of how similar events might impact today’s more populous, urbanized, and connected world. 

Technological progress, personal responsibility and the future of redistribution

Michael M. Lokshin's picture

A person is caught stealing groceries from a supermarket. How should the justice system sanction such behavior?
In the modern system of criminal justice, the sentence imposed on such a perpetrator should prevent that person from repeating the crime, demonstrate to society that such behavior is undesirable hence punishable, penalize the person for the morally wrong deed, and try to rehabilitate the criminal. As analyzed by Becker (1968), deterrence relies on the postulate that the threat of criminal punishment alters the cost-benefit calculation of rational agents.
But what if it doesn’t?

Shared Prosperity: A challenging but important goal to monitor

Judy Yang's picture

Shared prosperity is one of the World Bank Group’s Twin Goals, introduced in 2013. Progress toward this goal is monitored through an indicator that measures the annualized growth rate in average household per capita income or consumption among the poorest 40 percent of the population in each country (the bottom 40), where the bottom 40 are determined by their rank in household per capita income or consumption. Chapter 2 of the 2018 Poverty & Shared Prosperity Report provides an update on the recent mixed progress on shared prosperity around the world in about 2010-15.

The shared prosperity indicator was proposed as a means to shine a constant light on the poorest segments of the population in every country, irrespective of their level of development. Shared prosperity has no target or finish line, because the aim is to continuously improve well-being. In good times and in bad, in low and high-income economies alike, the bottom 40 percent of the population in each nation would be monitored. Tracking the bottom 40’s absolute growth as well as their growth relative to the mean is a way to remind us to always consider distributional impacts and strive for equitable outcomes.

An important but challenging goal to monitor

Despite its importance and universal relevance, shared prosperity is more challenging to monitor than global poverty. While one household survey is sufficient to calculate poverty, shared prosperity measurement requires two recent comparable surveys.

The implication of this stronger data requirement is that 91 out of the 164 economies with an international poverty rate measured in PovcalNet are included in the 6th edition of the Global Database of Shared Prosperity (GDSP).

A three-course meal in darkness: An ‘eye-opening’ experience for embracing inclusivity

Annette Akinyi Omolo's picture
During a recent “Dinner in the Dark” social experiment, Kenya’s governors, policy makers and legislators experienced first-hand some of the same challenges as people living with disabilities. Photo: World Bank

 “That tastes like fish.”

“There’s some avocado and tomato in it too!”

“What is that?”

These are some of the exclamations I heard from participants of a recent social experiment dubbed “Dining in the Dark” in Nairobi on November 13th as they ate the first course of their meal.