The fast pace at which climate change crisis has been unfolding, with yearly average temperatures making records for global warming virtually every year for a number of years now, the time may not be far off when the expense to cool the temperature of the facility holding COP meetings would rise manifold than today, unless the lukewarm attitude of policymakers changes significantly, and it catches up with scientific requirements to tackle global warming effectively.
A recent Financial Times (FT) published article ‘Energy demand for cooling in global cities to soar, says report’ pointed out in this regard ‘World cities will face longer heatwaves, greater disease risk and “skyrocketing” energy demand for cooling, according to a new report on post-industrial global warming of 1.5°C to 3°C, which the planet is on track to reach. …The world has already warmed by at least 1.1°C since pre-industrial times, a body of UN scientists has found, and exceeded 1.5°C in the past 12 months. …“The difference between 1.5°C and 3°C has life or death consequences for billions of people worldwide,” said Rogier van den Berg, global director at the WRI [World Resources Institute] Ross Center for Sustainable Cities.’
Having said that, the weak spirit of multilateralism, and over-board austerity policies being practised in a number of countries– in or outside of the International Monetary Fund (IMF) programmes– have meant both increase in debt distress overall globally– and especially in a number of developing countries, including Pakistan– and lack of availability of climate finance.
Having said that, over-board austerity policies have meant substantial increase in profits of banks. A recent FT published article ‘Fed’s high-rates era handed $1tn windfall to US banks’ pointed out in this regard ‘US banks made a $1tn windfall from the Federal Reserve’s two-and-a-half-year era of high interest rates, an analysis of official data by the Financial Times has found.’
This may mean greater difficulty for otherwise some semblance of macroeconomic stability that Pakistan has achieved recently, given pressure of global supply chains, and rise in commodity prices– especially oil– will likely reverse gains on the inflation side.
Also, the practice of neoliberal economics has meant that market fundamentalism has incentivized investment following sectors that bring quick profits, which has not appropriately allowed build-up of supply chains, and overall economic resilience within countries in general. Hence, in a world of polycrisis, and within it, a world having to face fast-unfolding threats like climate change, and also increase in geo-political conflict, have all increased the chances of more frequent, and more intense external shocks to economies, like the one witnessed in the wake of the Covid-19 pandemic. This means that while climate finance is not available in nowhere near adequate amount, the rise in inflation not only raises costs of increasing climate finance, they also set into motion (but wrongly) greater adoption of austerity policy as the leading choice to deal inflation in a number of countries, in turn, negatively impacting economic growth, squeezing fiscal space, and increasing debt distress.
A recent Guardian published article ‘Global supply chains are under pressure again. Will inflation start rising?’ indicated, for instance, with regard to the impact of recent rise in geo-political tensions in the middle east on supply chains, and inflation globally ‘Global shippers have been faced with a growing number of headaches in moving goods over the last year. At the top of this list is the disruption in the Middle East and the impact on the movement of trade through the Red Sea. Traffic has plummeted by two-thirds through the key shipping route since attacks on vessels by Houthi rebels began last year. The route accounted for 12% of all global trade before the attacks began. …The biggest impact from the disruptions has been on the cost for business to transport goods. Freight companies opting for the Cape of Good Hope route face an added 40% in fuel costs, while container prices have also risen. The oil price climbed for a second consecutive day to almost $76 a barrel on Wednesday, from $71 at the start of the week. Some analysts believe it could break $80 within days.’
Moreover, the drop in inflation in the USA, which has closed in on the target of 2 percent, and the cut in policy rate recently, will likely improve growth outlook for the country, while provision of significant stimulus by authorities in China to their economy will also likely boost economic growth. Taken together, this will likely add greater pressure on global supply chains, and may cause increase in inflation globally, since economic resilience, and within it the resilience of supply chains has not increased much since the days of the Covid pandemic.
This may mean greater difficulty for otherwise some semblance of macroeconomic stability that Pakistan has achieved recently, given pressure of global supply chains, and rise in commodity prices– especially oil– will likely reverse gains on the inflation side.
