World Economic Situation and Prospects 2008 (WESP 2008)

According to WESP 2008, the world economy is facing serious challenges in sustaining the strong pace of economic growth seen over the past few years. While the baseline forecast is for world economic growth to moderate somewhat in 2008, the risks associated with the bursting of the housing bubble in the United States, the related unfolding credit crisis, the decline of the dollar, large global imbalances and high oil prices are all pointing to the downside. The report draws some lessons from the global financial turmoil of 2007, which was triggered by the meltdown of sub-prime mortgages in the United States, and points out that the various measures adopted by central banks of the major economies did not address the root causes of the turmoil: the huge global imbalances. In an alternative scenario, which takes into account the possibility of a sharper-than-expected decline in house prices in the United States and a hard landing of the US dollar, the United States economy would fall into a recession, while global growth would be significantly lower than the baseline. In addition to trends in international trade and capital flows, WESP 2008 also covers the latest progress and policy issues related to international trade negotiations and reform of the international financial system. http://www.un.org/esa/policy/wess/wesp.html

Filed under: Uncategorized, Business Environment, Microfinance, Poverty, Publications, Trade

New Microinsurance Initiative from the ILO and GatesFoundation

The International Labour Organization (ILO) and the Bill & Melinda Gates Foundation recently announced a new partnership to develop or improve insurance products to promote decent work for tens of millions of low-income people in the developing world. Over the course of the next three years, the facility will issue bi-annual requests for proposals and provide funding to pilot new insurance products, improve efficiency in the field, and use technology to create new products that better meet people’s needs. The facility will also train technical specialists to help replicate successful models. This facility builds on the successful efforts of the CGAP Working Group on Microinsurance to document the experiences of microinsurance operations around the world. Funded by DFID, GTZ, ILO and SIDA, this “Good and Bad Practices” project conducted a series of case studies of insurance companies, microfinance institutions and community-based schemes that provide insurance to the poor. See case studies on http://www.microinsurancefocus.org

Filed under: Uncategorized, Business Environment, Microfinance

Microfinance Profits: Muhammad Yunus challenges Compartamos bank

Is it ok to make a big profit from lending to the poor? Where does microcredit end and loan sharking begin? Carlos Danel and Carlos Labarthe, the CEOs of Compartamos, a nonprofit-cum-commercial bank which charges an annual interest rate of nearly 100 percent, believe that only the lure of profits will motivate people to lend to the poor. Today Compartamos reaches 700,000 borrowers and 88 percent of its clients come back for more loans. In 2006, it was rated as Mexico’s most profitable bank. Muhammad Yunus, the Nobel laureate who pioneered the movement three decades ago and has made loans to some 7 million borrowers in Bangladesh, disagrees. Poor people’s willingness to pay high interest is not a justification for charging it, he says. Compartamos is not microcredit, it’s “raking in money off poor people desperate for cash.” http://psdblog.worldbank.org/psdblog/2007/10/muhammad-yunus-.html

Filed under: Uncategorized, Development, Events, Microfinance