BIZweek n°353 30 jui 2021
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• Parution : n°353 de 30 jui 2021

• Editeur : Capital Publications Ltd

• Format : (260 x 370) mm

• Nombre de pages : 9

• Taille du fichier PDF : 3,4 Mo

• Dans ce numéro : forum économique mondial juillet 2021.

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 VENDREDI 30 JUILLET 2021 BIZWEEK ÉDITION 353 Trading into a bright energy future The case for open, high-quatity solar photovoltaic markets ACTA PUBLICA SOLAR PHOTOVOLTAIC TECHNOLOGIES Keeping markets open is critically important Open global trade has been an important factor in the rapid deployment of solar photovoltaic technologies around the world. The need to keep markets open and to develop harmonized product standards across the world is examined in a new joint report by the World Trade Organization (WTO) and the International Renewable Energy Agency (IRENA) Solar Photovoltaic (PV) has become a pillar of low-carbon sustainable energy strategies, with the cost of electricity generated by PV plants declining by 77% between 2010 and 2018, according to the publication titled ‘Trading into a bright energy future : The case for open, high-quality solar PV markets’. Trade and the globalization of the solar PV market have been major factors in driving the decrease in the prices of the technology as manufacturers are better able to source goods and services from competitive suppliers. However, further support from trade policies and harmonized product standards is needed to unlock additional cost reductions and job creation in the solar PV sector, the booklet states. While average tariffs on solar PV goods are relatively low, large divergences remain among WTO members, with some applying tariffs as high as 15% on machines for PV panels, for example. #131RENA\ee,F.2 ›WWire./1 E rem. AGere. git -ffleelliMiimmuer International cooperation can help Coherence in product standards is also crucial to a globalized PV market to promote safe and inclusive trade in solar PV goods and services, the booklet adds. The publication draws from the expertise of IRENA, which provides guidance to countries on the development and implementation of a quality infrastructure for trade in renewable energy technologies. International cooperation, ranging from mutual recognition of standards and regulatory provisions in trade agreements to formal cooperation partnerships and regulatory harmonization, can help companies seize trade opportunities and enable governments to develop sustainable energy systems. Sustainable energy is particularly vital in light of the health and economic crisis stemming from the COVID-19 pandemic according to the booklet. Off-grid solar energy solutions can be rampedup quickly for healthcare centres ; moreover, trade-led solar PV deployment can help to support economic recovery from the pandemic, not least by creating jobs, which are expected to reach over 40 million worldwide by 2050 in the renewable energy sector. The report thus suggests that further trade opening and development of the solar PV sector can strengthen the critical infrastructure needed to fight the COV- ID-19 pandemic and support efforts to rebuild the world economy. It shows the need for countries to develop a robust «quality infrastructure» to promote safe trade in solar PV goods and services. The report also looks at the need to strengthen international cooperation, particularly in product standards, and demonstrates how IRENA and the WTO can support efforts to promote a secure and inclusive global solar PV market. Renewable energies and… COVID-19 ? The immediate focus for governments in the context of the COVID-19 pandemic is to tackle the health crisis, not least by strengthening healthcare and other critical public infrastructures. Reliable and sufficient energy can help to ensure basic services, such as lighting and water supplies, and to power vital medical appliances, such as vaccine refrigerators and ventilators. Many primary healthcare centres in developing countries must operate without access to electricity or must resort to costly diesel backup generators. Renewable energy, including off-grid solar PV (i.e. PV systems not connected to the local electricity grid), can be rampedup relatively quickly and could help healthcare centres not connected to the electricity grid to improve their level of care. Such solutions could also improve access to water and sanitation services, and ensure the continued operation of critical infrastructures, such as mobile testing centres and laboratories, as wellas of the cold supply chains (e.g., for vaccines) on which so many healthcare services rely (IRENA, 2015). As wellas contributing to tackling the COVID-19 health crisis, renewable energies can play a key role in helping countries to overcome the economic fallout from the pandemic. The pandemic has disrupted production and supply chains, shrunk demand for goods and services, and depressed commodity prices. Overall, global gross domestic product (GDP) is expected to contract by 5.2 per cent in 2020 (World Bank Group, 2020a). Four hundred million people lost their jobs in the second quarter of 2020, and another 140 million people are expected to have lost their jobs in the third and fourth quarters of 2020 (ILO, 2020). The recent crisis has exposed massive gaps in energy access, which affect healthcare, water supply, information and communication technologies and other vital services. Recovery plans incorporating the transformation of energy systems toward sustainable energy could help tackle these challenges while helping to overcome the economic slump and create much-needed jobs. Due to the global diversification and decentralization of the solar PV market, as wellas its rapid growth, renewable energies present an opportunity for job creation across the globe. It is estimated that 11.5 million jobs will be created in the solar PV industry by 2050 (IRENA, 2019b). 6 VENDREDI 30 JUILLET 2021 BIZWEEK ÉDITION 353 NEW RESEARCH Market power weakens the effect of monetary policy Companies with more market power are Iess responsive to a 100 basis points increase in the policy rate than those with Iess market power. (response of firmsales one year alter the increase, in percent) o -0 5 -1.5 -2.0 Average FirmHigh-Maricup FirmLow-Markup FirmSourceIMF staff calculatIons based on US CornpustatNote- Response of real sales response one year atter a 10D bas Ms point increase in the monetary policy rate, in percent. A US flrmis considered high-markup (low-markup) when its merkup level is at the 7S (25') prarcentlle of thernarkup distribution IMF POST SCRIPTUM Taming market power could (also) help monetary policy Some central banks are currently debating whether to tighten monetary policy to fight inflationary pressures, after having eased decisively in response to the COVID-19 shock. In making such decisions, central bankers have to consider how much businesses and consumers will respond. The structure of the financial system and the future expectations of consumers and businesses are key drivers of how effective monetary policy actions will be. Yet there’s another, overlooked, driver : corporate market power ROMAIN DUVAL, Assistant Director, IMF’s Research Department DAVIDE FURCERI, Deputy Division Chief of the Regional Studies Division, IMF’s Asia and Pacific Department MARINA M. TAVARES, Economist, IMF’s Research Department New International Monetary Fund (IMF) staff research has found ever larger and more powerful companies are making monetary policy a less potent tool for managing the economy in advanced economies, all else equal. Market power has risen in many advanced economies and emerging market countries in recent years, as seen in price markups—the ratio of a good or service’s price to its marginal cost of production, concentration, or profits. For example, recent IMF work finds that global price markups have increased by more than 30 percent, on average, across listed firms in advanced economies since 1980, and twice as fast in digital sectors. In addition, the COVID-19 recession is likely to amplify these trends. Large corporations are expected to gain market share vis-à-vis small businesses, which are at greater risk of insolvency. Our study finds that firms with greater market power respond less to monetary policy actions, possibly because of their bigger profits. Larger profits make these firms less sensitive to changes in external financing conditions, such as those triggered by central banks’decisions. For example, as of March 2021, Apple had over $200 billion in cash and investment in marketable securities, while Alphabet had over$150 billion. Firms with such large cash cushions can decide on investment and other projects without having to worry about how easily they could tap other funding sources. In contrast, firms that face greater credit constraints, such as young, low-markup firms, are much more responsive to monetary policy actions than older, larger, higher-markup corporations. It could also be that firms with greater market power rely less on funding sources whose conditions respond swiftly to monetary policy actions, such as bank credit. Harmful to business dynamism and growth Specifically, using data for the United States and a panel of 14 advanced economies, we find that high-markup firms respond a lot less to a monetary policy shock—an unexpected change in the policy rate—than the average firmin the economy. For example, in the US, a 100 basis point increase in the policy rate causes a low-markup firmto cut sales by about 2 percent after four quarters, while a high-markup firmbarely reduces its sales. Results for the panel of advanced countries are qualitatively similar. On top of being generally harmful to business dynamism and growth, excessive market power can also hamper central banks’ability to stimulate economic activity during recessions, and to cool it down during expansions. In principle, if monetary policy is less powerful, central banks could just use more of it—by easing more aggressively to fight a recession, for example ; however, this approach may not be fully successful in advanced economies when so many central banks are constrained by the effective lower bound on interest rates, and also face (actual or perceived) limits to quantitative easing—such as financial stability concerns from very large and persistent asset purchases. Conversely, greater market power implies that, should inflationary pressures become persistent, central banks may need to tighten monetary policy more aggressively than would be the case in a more competitive economy, all else equal. Lower-markup firms and more competitive industries would be hit disproportionately. More broadly, aggressive tightening might put the recovery at risk. One silver lining is that market power may dampen the passthrough from higher input costs to output and inflation in the first place, all else equal—market power can reduce the response of inflation and output to a wide range of macroeconomic shocks beyond just monetary policy shocks. Need to secure recovery These considerations further strengthen the case for reforms to increase competition in advanced economies. High on the agenda are enhancements to competition law and policy frameworks. These include, depending on the jurisdictions, tighter merger control— particularly when it comes to dominant firms, stronger enforcement of abuse of dominance, greater reliance on market investigations, and more specific measures to cope with the fastchanging digital economy. Policymakers will need allavailable tools to secure a dynamic, sustainable, and inclusive recovery. Curbing corporate market power would not only support the recovery directly by stimulating investment, innovation and wage growth, but also indirectly by making monetary policy more powerful. Encouragingly, improvements in antitrust frameworks are currently under consideration in key jurisdictions. 7

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