IMF says AML/CFT crucial for financial sector stability in Kyrgyz Republic

• Growth accelerated towards the end of 2016, reaching 3.8% with 0.5% deflation due in part to exchange rate appreciation of about 9% percent.
• Consolidation efforts should continue to meet the 2017 fiscal deficit target of 3% of GDP.
• The passage of the anti-money laundering and counter finance of terrorism law is vital for the stability of the financial sector.

An IMF mission led by Edward Gemayel visited Bishkek from February 9 to 15 to take stock of the latest economic developments, discuss progress on economic reforms, and prepare for the upcoming combined Article IV consultation and fourth review under the ECF programme planned for April. At the conclusion of the visit, Gemayel issued the following statement:

“With external pressures subsiding, economic indicators have improved, but the recovery remains modest. Growth accelerated towards the end of 2016, reaching 3.8% with 0.5% deflation due in part to exchange rate appreciation of about 9%. Despite a shortfall in tax revenue, the 2016 deficit was contained to 4.5% of GDP due to restrained spending on non-priority items and the rephasing of some investment projects.

“Consolidation efforts should continue to meet the 2017 fiscal deficit target of 3% of GDP. It is important to continue to implement revenue and expenditure measures announced last year, including the elimination of the value added tax (VAT) exemption on flour, rationalising the public sector wage bill, and streamlining spending on goods and services. Resisting spending pressures will be critical in the run up to the presidential election. Developing a credible and transparent fiscal rule will help maintain fiscal discipline."

Gemayel added, “The passage of the anti-money laundering and counter finance of terrorism (AML/CFT) law is vital for the stability of the financial sector. The law is necessary to keep the Kyrgyz Republic on the white list of the Eurasian Group on AMl/CFT. Failure to pass the law could lead to loss of correspondent banking relations and cut the financial sector off from the outside world.”

Frost & Sullivan sees demand for independent analyses supporting IPOs

Frost & Sullivan is expecting strong growth in the number of initial public offerings (IPOs) on the Australian Stock Exchange (ASX) in 2017. The number of proposed listings on the ASX for 2017 looks strong with close to 45 already in the pipeline to date, the company has noted.

Frost & Sullivan also said that IPO listings in 2016 on the ASX finished the year on par with 2015. Information technology and financial technology (fintech) listings represented almost 25% of the total IPO market. 

Frost & Sullivan contributed to a number of those IPOs in 2016 with independent market reports (IMRs), which detail market size, forecasts, growth, market drivers and trends pertaining to the industry that the company seeking to offer an IPO operates in. An IMR is typically inserted into the prospectus or can be used as a standalone document. 

Frost & Sullivan has produced over 40 IMRs for ASX-based IPOs over the last five years, said Andre Clarke, MD, ANZ at Frost & Sullivan. "Frost & Sullivan has produced a number of IMRs as companies and their lead managers are becoming more aware of the importance of independent market analysis in an increasingly competitive and regulated Australian IPO market," says Clarke.

"Potential investors are looking to understand the growth drivers in an investee's business, and seek confirmation and assurance that the investee is operating in an attractive and growing market."

Frost & Sullivan anticipates a continued need for prospectuses to include more accurate, up to date market data, and has strengthened its IMR team in Australia to cater to the expected wave of IPOs this year. The team will be led by Ivan Fernandez, Industry Director, ANZ at Frost & Sullivan with continued support from Mark Dougan, who authored most of the IMRs that Frost & Sullivan has already produced.

"Ivan's 15 years of experience at Frost & Sullivan in Australia working with many clients across a range of industries makes him the perfect person to lead this team. Ivan has a unique understanding of what market information is required in a prospectus to maximise funding for each IPO," added Mr. Clarke.

Frost & Sullivan has contributed to over 100 IPOs on the SGX, Bursa Malaysia, and the HKEX (Hong Kong Exchange). IPOs that Frost & Sullivan has successfully supported on the ASX include dried food supplier Murray River Organics, services conglomerate Spotless, and Crowd Mobile, which makes mobile products. 

Japan Macro Advisors launches tool to support analyses of the Japanese economy

Source: Japan Macro Advisors. Interactive chart and table.

Japan Macro Advisors (JMA) has launched My Charts, a set of web-based analytical tools to help economists and decision makers stay on top of the Japanese economy.

Building on the free and constantly updated macroeconomic database that JMA provides to the public, My Charts functions as a personal repository whose charts can be converted into PowerPoint slides. The database currently includes over 500 indicators, some of them unique to JMA.

"Economists and analysts such as myself spend too much time not analysing, but searching and downloading data, updating charts and tables, copy-pasting them to presentation slides. Our tools will free up valuable time, letting us spend more time actually thinking about the economy," said Takuji Okubo, Founder and Chief Economist at JMA.

JMA is also working to bring a similar service to India.

Interested?

A US$30/month premium plan enables users to save virtually unlimited pages of charts/tables and gives them access to premium research produced by JMA. A free trial plan is available that provides a subset of the features included in the premium plan. JMA also provides corporate services that allow clients in-person meetings, seminars and research support with JMA economists.

Qatar makes significant strides in Global Innovation Index 2016

Qatar is ranked first in the world on two indicators, Ease of Paying Taxes and Tertiary Inbound Mobility of International Students in the Global Innovation Index 2016, reports Qatar's Ministry of Transport and Communications.

The annual Global Innovation Index explores rising share of innovation carried out via globalised innovation networks and is themed Winning with Global Innovation. The report also concludes that there is ample scope to expand global corporate and public R&D cooperation to foster future economic growth. It is published by UN's World Intellectual Property Organization (WIPO), INSEAD Business School and Cornell University.

The 2016 report highlights that gains from global innovation can be shared more widely as cross-border flows of knowledge and talent are on the rise. The Index, which measures performance of 128 countries on 82 indicators, placed Qatar third in the Arab world and 50th globally in the overall performance rankings.

Qatar advanced six positions on the Infrastructure pillar (ICT access and use), 10 positions on Market Sophistication and 28 positions on Business Sophistication, ranking 16th, 68th and 78th globally, respectively. Other wins for Qatar are - Electricity output (6th), University/industry research collaboration(8th), State of cluster development (8th), Joint venture/strategic alliance deals (8th) and Foreign direct investment outflows (16th).

Qatar is now ranked 52nd on Wikipedia edits and 46th on Video uploads on YouTube indicators within Online creativity sub-pillar. Qatar gained five ranks in Generic top-level domains and is now ranked 56th globally.

According to Qatar’s ICT Landscape Report 2016: Business, 13% of multinational ICT companies invested in R&D, with 8% of the local ICT companies investing in R&D activities in 2014. Among the ICT enterprises investing in R&D in Qatar, a majority (63%) of them spent less than 5% of their annual budget for R&D in 2014 in Qatar.

Source: Global Innovation Index. Top rankings for the Global Innovation Index.

Switzerland emerged as the global leader among innovative economies followed by Sweden, the UKm the US and Finland. Singapore at 6th place was the top-ranked Asian country and the only Asian representative in the top 10, with Korea coming in 11th.

Mainland China joins the ranks of the world’s 25 most-innovative economies for the first time, also the first time a middle-income country has joined the highly developed economies that have historically dominated the top of the Global Innovation Index through its nine years of surveying the innovative capacity of 100-plus countries across the globe, noted Cornell, INSEAD and WIPO.

"China’s progression reflects the country’s improved innovation performance as well as methodological considerations such as improved innovation metrics in the Global Innovation Index," they said in a statement. "Despite China’s rise, an 'innovation divide' persists between developed and developing countries amid increasing awareness among policymakers that fostering innovation is crucial to a vibrant, competitive economy."

“Investing in innovation is critical to raising long-term economic growth,” says WIPO Director General Francis Gurry. “In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders.”

Japan, the US, the UK, and Germany stood out in “innovation quality,” a top-level indicator that looks at the calibre of universities, number of scientific publications and international patent filings. China is 17th in innovation quality, making it the leader among middle-income economies for this indicator, followed by India which has overtaken Brazil.

Soumitra Dutta, Dean, Cornell College of Business and co-editor of the report, said: “Investing in improving innovation quality is essential for closing the innovation divide. While institutions create an essential supportive framework for doing so, economies need to focus on reforming education and growing their research capabilities to compete successfully in a rapidly changing globalised world.”

Bruno Lanvin, INSEAD Executive Director for Global Indices, and co-author of the report, emphasised, “Some may see globalisation as a trend in search of its ‘second breath.’ Yet, the relative contraction of international trade and investment flows does give even more strategic importance to the two sides of global innovation: on one hand, more emerging countries are becoming successful innovators, and on the other hand, an increasing share of innovation benefits stem from cross-border co-operation.”

Source: Global Innovation Index. Regional innovation leaders. In the Middle East, the UAE ranked first, followed by Saudi Arabia.

At the national level, the report says that innovation policies should more explicitly favour international collaboration and the diffusion of knowledge across borders. New international governance structures should also aim to increase technology diffusion to and among developing countries.

Johan Aurik, Managing Partner and Chairman of GII Knowledge at AT Kearney, the global consultancy, says: “Digital has become a primary driver of strategy development and innovation for business in almost all sectors; I am convinced we are only at the beginning. Notably for established organisations, the challenge lies in finding ways to successfully innovate by using and transforming existing resources and business practices. Realising success in today’s new landscape requires creative, forward-thinking strategies that embrace digital and address the need to change the fundamental ways of working in the company.”





Regional analyses include:

Central and Southern Asia

India, at 66th, is the top-ranked economy in Central and Southern Asia, showing particular strengths in tertiary education and R&D, including global R&D intensive firms, the quality of its universities and scientific publications, its market sophistication and ICT service exports where it ranks first in the world. India also over-performs in innovation relative to its GDP. It ranks second on innovation quality amongst middle-income economies, overtaking Brazil. Relative weaknesses exist in the indicators for business environment, education expenditures, new business creations and the creative goods and services production.

“The commitment of India to innovation and improved innovation metrics is strong and growing, helping to improve the innovation environment. This trend will help gradually lift India closer to other top-ranked innovation economies,” says Chandrajit Banerjee, Director General of Confederation of Indian Industry (CII).

Following India in the region are Kazakhstan (75th), the Iran (78th), Tajikistan (86th), Sri Lanka (91st), and Bhutan (96th).

Northern Africa and Western Asia

Of the top five Global Innovation Index performers in this region, two are from the six-member Gulf Cooperation Council (GCC): UAE (41st) and KSA (49th). Many of the GCC countries are diversifying their economies following a decades-long dependence on oil, turning their focus towards more innovation-driven and diverse sources of growth and overcoming relative shortcomings in areas, such as Institutions, market and business sophistication.

“Innovation no longer occurs in silos; today it crosses borders and relies on collaboration between various entities to create a win-win prospect. The UAE is harnessing a globalised strategy to lead innovation internationally through its Smart City agenda and bring about a greater degree of convenience and satisfaction, and ultimately happiness, for all,” says Osman Sultan, Chief Executive Officer, du.

Turkey ranks 4th in the region in 2016 and 42nd overall. The region shows its highest average scores in ICT access and ICT-driven business model creation, as well as in e-government, and productivity growth. The report also said many of the GCC countries are diversifying their economies following a decades-long dependence on oil, turning their focus towards more innovation-driven and diverse sources of growth and overcoming relative shortcomings in areas, such as Institutions, market and business sophistication.

Southeast Asia, East Asia, and Oceania

Singapore (6th), Korea (11th), Hong Kong (14th), Japan (16th), and New Zealand (17th) lead the rankings in this region. The majority of innovation leaders in the Global Innovation Index are in this region, or in Europe.

Among upper-middle income economies, China (25th), Malaysia (35th), and Thailand (52nd) rank first in the region. Vietnam (59th) maintains its top place among lower-middle-income economies, followed by the Philippines (74th,) and Indonesia (88th). Low-income economy Cambodia maintains its ranking in the top 100 economies overall (95th).

The region’s strongest average performance is in the number of teachers per pupils and productivity growth, with lower scores in R&D financed by foreign firms, ICT services exports and imports, and intellectual property receipts.

Interested?

Read the Global Innovation Index 2016 report (also available in Chinese)

Meltwater breaks down social media coverage for Singapore's National Day

Meltwater, which provides media intelligence services, has charted Singapore's 51st birthday on social media from the period of August 4 to August 10, 2016. The company named brands such as Singtel, StarHub, M1 and Jetstar as participating in the use of related hashtags, including #SG50, #SG51, #NDP2016, #starhubsg51, #majulahmom, #jetstarsinglish, and #jestarsg51.

The #SG50 hashtag was introduced for Singapore's 50th birthday, and #SG51 continues in that tradition. While there were 28,048,000 mentions of #SG50 in the days leading up to and including Singapore's National Day (August 9) in social media in 2015, against 3,660,000 mentions of #SG51 for the same period this year the majority of this conversations reflected positive sentiments for the celebration, Meltwater said.

Source: Meltwater. Graph showing share of voice by brand for the #SG51 hashtag for the period from August 4 to 10, 2016.

#NDP2016 refers to the annual National Day Parade, while StarHub's viral tribute to mothers in Singapore, Majulah Mom, had its own hashtag. Last but not least, airline JetStar followed on from an April Fool's Day skit about introducing Singlish on flights with the actual use of Singlish on flights on August 9.

Meltwater tracks share of voice as part of its services, and says that Jetstar won the overall battle of share of voice on social media and saw the most positive responses, while Singtel had the most exposure.

IMF mission says Pakistani economic reform needs to continue beyond EFF

An International Monetary Fund (IMF) staff mission led by Harald Finger, visited Dubai from July 26 – August 4, 2016 to conduct discussions on the 12th and final review of Pakistan’s economic programme, which is supported by a three-year IMF Extended Fund Facility (EFF) arrangement. The staff team met with Finance Minister Ishaq Dar, State Bank of Pakistan (SBP) Governor Ashraf Wathra, and other senior officials.

At the conclusion of the mission, Finger issued the following statement: “After productive discussions, the mission and the Pakistani authorities have reached staff-level agreement on the completion of the twelfth and final review under the EFF arrangement. The agreement is subject to approval by the IMF Management and the Executive Board. Upon completion of this review, SDR73 million (about US$102 million) will be made available to Pakistan.

“Growth is expected to reach 5% in FY16/17, supported by buoyant construction activity, strengthened private sector credit growth, and an investment upturn related to the China Pakistan Economic Corridor (CPEC). Nevertheless, a challenging global environment and declining exports are weighing on growth prospects. Average inflation is expected at around 5.2% in FY2016/17, remaining well-anchored by continued prudent monetary policy. Gross international reserves reached US$18.1 billion at end-June 2016, covering over four months of prospective imports.

“Programme performance in Q4FY15/16 has been solid. Most end-June 2016 quantitative performance criteria (PCs) were met, although the ceilings on the budget deficit and net domestic assets (NDA) of the State Bank of Pakistan (SBP) were exceeded by small margins. We welcome the authorities’ commitment to take remedial actions in these areas. All indicative targets and structural benchmarks (SB) were met, except for the delayed notification of multi-year tariffs for three power distribution companies.

“In the course of the IMF-supported programme, Pakistan’s economy has made significant progress toward strengthening macroeconomic and financial stability and resilience, and laying foundations for higher, more sustainable, and inclusive growth. Growth gradually accelerated, international reserve buffers have been rebuilt, and the budget deficit narrowed significantly, helped by sizeable growth in tax revenue. Inflation declined, helped by lower oil prices and improved monetary and fiscal policies. Regulatory reforms and improved energy sector performance have slowed the accumulation of arrears and begun to reduce outages. Coverage under the Benazir Income Support Program (BISP) has expanded, and stipends increased by over 60%. Regulations to fight money-laundering and financing of terrorism have been strengthened. Despite some delays, the authorities continue to advance in their work toward restructuring and divesting ailing public sector enterprises (PSEs).

“To consolidate and reinforce the gains achieved in the last three years, the economic reform agenda needs to continue after the programme ends. In this context, it will be important to further strengthen public finances and external buffers, broaden the tax net, improve public financial management, strengthen the monetary policy framework, address losses in PSEs, complete the energy sector reforms, and accelerate competitiveness-enhancing improvements of the business climate, including the trade regime. Continued progress with these reforms will be critical to reinforce the authorities’ achievements under this IMF-supported programme."

End-of-Mission statements of IMF staff teams convey preliminary findings after a visit to a country. The views expressed do not necessarily represent the views of the IMF’s Executive Board.

IMF lists recommendations for economic policy in Japan

Economic growth in Japan has slowed due to weak private consumption and sluggish investment, and inflation has lost its forward momentum, according to the Executive Board of the International Monetary Fund (IMF), which concluded an Article IV consultation* with Japan in late July. While financial conditions remain accommodative, falling stock prices and the appreciation of the yen have resulted in a modest tightening, the board said.

The authorities have responded to the weaker domestic and external economic environment through additional monetary and fiscal support, including the adoption of the negative interest rate policy, plans for additional fiscal stimulus, and the postponement of the scheduled 2017 consumption tax hike by two and a half years.

Nevertheless, the outlook for growth and inflation remains subdued, the IMF said. Private consumption is projected to grow modestly and weakness in the global recovery and trade, higher uncertainty, especially in the wake of the Brexit referendum, and the recent appreciation of the yen will likely pose a drag on net exports and investment. Consequently, the economy is expected to expand at a moderate pace of about 0.3% in 2016, before slowing to 0.1% in 2017, excluding the possible effect of the yet to be adopted economic stimulus package. Over the medium term growth is projected to be in line with potential (which is on a declining trend), while inflation is expected to rise to about 1%.

Low confidence in economic growth prospects is holding back investment and credit demand, while labour market duality and inflexibility are hampering wage growth, the IMF said. The financial sector’s support of risk-taking is limited, and the stop-go nature of fiscal policy and optimistic growth assumptions underlying medium-term budget projections have left fiscal policy without a credible medium-term anchor and are contributing to policy uncertainty. Weak monetary transmission, sluggish wage-price dynamics, and a falling natural rate of interest are preventing the needed rise in inflation expectations, creating a communication and credibility challenge for the Bank of Japan (BoJ).

Global weakness and volatility are complicating matters. Sluggish global growth and overcapacity in the traded goods sector prevented the weaker yen from materially boosting exports. Declining commodity prices failed to boost activity as expected, but instead put pressure on headline inflation and forced the BoJ to repeatedly extend its timeline for hitting the inflation target. Moreover, concerns in emerging markets and revisions to the expected path of monetary policy in advanced economies led to heightened volatility in financial markets and safe haven appreciation pressures.

Executive Directors** welcomed the initial success of Abenomics and the authorities’ forceful implementation of policies to lift growth and inflation. Nevertheless, growth remains subdued and deflation persists, on the back of weak consumption, lacklustre private investment, and sluggish exports. Directors noted strong headwinds from a weak global recovery, the appreciation and volatility of the exchange rate, and adverse demographics. They generally agreed that a comprehensive and coordinated policy upgrade is now needed to achieve the ambitious targets on growth, reflation, and fiscal consolidation.

Directors consider structural reforms an essential component of the reloaded Abenomics, aimed at raising productivity, labour supply, and potential growth. They support labour market reforms to reduce duality and increase labour force participation by female, older, and foreign workers. As part of the overall policy mix, Directors generally saw a role for policies that could help generate wage-price dynamics without excessive interference in market mechanisms. In this regard, they welcomed the decision to lift minimum wage growth, and recommended consideration of options to strengthen incentives for companies to raise wages and promote flexible labour contracts.

Directors also commended the authorities for maintaining a sound and stable financial sector. They noted that financial stability risks could nonetheless arise from prolonged unconventional monetary policies and the delay in achieving reflation and fiscal sustainability. Directors therefore encouraged the authorities to continue to strengthen the macroprudential policy toolkit; and enhance the monitoring of liquidity in the government bond market, financial institutions’ profitability, and foreign exchange risks. Efforts should also continue to improve the resilience of regional banks and inter-agency coordination.

*Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

**At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarises the views of Executive Directors, and this summary is transmitted to the country's authorities. Explore any qualifiers used in summings up

IMF gives Singapore economy thumbs up

The Executive Board of the International Monetary Fund (IMF) has concluded its Article IV consultation* with Singapore for 2016, noting that the Singapore economy continues to perform well despite being impacted by a combination of cyclical and structural factors, originating both at home and abroad.

Growth moderated from 3.3% in 2014 to 2% in 2015. It was 2.2% in the first half of 2016. Unemployment has remained low, but net employment generation slowed rapidly in 2015 and headline inflation has stayed below zero since late 2014. In response, macroeconomic policies have become more accommodative, spearheaded by monetary policy easing and an expansionary budget. Financial sector and macroprudential policies have ensured financial stability. On the external front, lower global energy prices contributed to a higher current account surplus in 2015, though the surplus declined in the first quarter of 2016.

Growth is projected to moderate slightly to 1.7% in 2016, as the full impact of the global shocks experienced in 2015 is felt, and is expected to recover to 2.2% in 2017. Economic activity will be supported by accommodative policies, along with low energy prices and the ongoing global recovery. However, near-term risks are skewed to the downside, including from slow global and regional growth and spillovers from renewed global financial volatility. Headline and core inflation are benign, expected to be -0.3% and 0.8% in 2016, respectively, before rising to 1.1% and 1.4% in 2017 on gradually recovering energy and commodity prices. The current account surplus is expected to moderate over the medium term amid rapid population ageing and reforms to boost domestic demand, including through better health care, pensions, and other social insurance arrangements.

Structural policies continue to focus on moving toward an innovation-based economy that relies less on labor and more on productivity growth, especially in the non-traded sector. Policies focus on targeted support to businesses to promote automation, innovation, and internationalisation. The government is also raising investment in infrastructure and other long-term capital projects and rolling out policies to improve access to education and health care, particularly for the elderly.

Executive Directors observed** that Singapore’s highly open economy enjoys strong fundamentals and continues to perform well, and commended the authorities for their skillful management. Directors noted that Singapore’s strong external position and ample fiscal space allows the authorities to adjust policy settings in response to slower growth and external risks stemming from protracted lower growth in advanced and emerging economies and global financial market volatility. Directors considered the authorities’ expansionary fiscal policy stance and further easing of monetary policy in April as appropriate, in view of the weaker‑than‑expected inflation and growth developments. They agreed that the current accommodative fiscal stance is providing welcome support to activity and applauded the authorities’ willingness to act quickly in response to evolving conditions.

However, a number of Directors saw scope for additional fiscal stimulus to boost domestic demand, close the output gap, and provide insurance against elevated downside risks to growth. In this context, a number of Directors underscored that the current fiscal rule has served the country well for many years, while a number of others saw merit in considering aligning it to the business cycle. Turning to monetary policy, Directors considered that current policy settings are appropriate. They agreed that clear monetary communications are desirable, particularly to avoid short‑run instability. While some Directors considered that more frequent elaboration of inflation prospects would be beneficial, a number of other Directors recognised merits in the authorities’ current approach, which has served the country well and should be retained.

Directors observed that Singapore is at the mid‑point of a decade long restructuring to a knowledge‑based economy. They welcomed the authorities’ more targeted approach to supporting automation, innovation and productivity, while expanding social insurance and safety nets. Directors urged the authorities to increase spending on research and development (R&D), promote private sector R&D, and support new, creative firms. They looked forward to the unveiling of initiatives by the Committee on the Future Economy, which was set up to position Singapore for the future and identify areas of growth.

Directors observed that Singapore’s financial cycle has turned and that credit growth to residents has moderated. They noted that macro prudential policies in place made a decisive contribution to containing household indebtedness and should be retained. Directors considered that high levels of corporate debt warrant caution and close monitoring, although risks are mitigated by companies’ high debt‑servicing capacity.

Directors recognised Singapore’s high regulatory and supervisory standards in the financial sector. They noted that banks have remained profitable with low non‑performing loans and large capital and liquidity cushions as they adjust to changes in the direction of capital flows and lower oil prices. Directors welcomed that the regulation and supervision of banks is being further enhanced, and emphasised the need for banks to remain vigilant. They noted the authorities’ continued efforts to align the anti-money laundering and countering financing of terrorism (AML/CFT) framework with international standards, and welcomed recent steps to strengthen its enforcement.

Directors noted the finding that Singapore’s external position is substantially stronger than is consistent with macroeconomic fundamentals and desirable policies, while acknowledging that considerable uncertainty surrounds the assessment. The current account surplus increased further in 2015, as buoyant consumption only partly offset the narrowing of the oil trade deficit. Fiscal expansion should help reduce the external imbalance in the near term. Rapid population ageing and policies to boost domestic demand and enhance inclusion, including better health care, pensions, and other social insurance arrangements, should over time lead to a significant reduction in Singapore’s external imbalance.

*Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

**At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. Read the qualifiers used in summaries.

Real GDP growth in KSA to bounce back in 2017

Real GDP growth in KSA is expected to slow to 1.2% in 2016, but recover to 2% in 2017 as the pace of fiscal consolidation eases and to settle around 2.25 to 2.5% over the medium-term. Inflation has risen in recent months to over 4% as energy and water prices have been increased, and is expected to ease to 2% in 2017.

The observations were made by the Executive Board of the International Monetary Fund (IMF), which concluded an Article IV Consultation* with KSA on July 18, 2016. The board noted that bank deposits have declined, but growth of credit to the private sector remains strong. Capital buffers are high, non-performing loans (NPLs) low, and banks are well provisioned against loan losses.

Based on current policies, the IMF says that the fiscal deficit is projected to narrow to 13% of GDP in 2016. Non-oil revenues are expected to increase, while spending restraint, particularly on the capital side, will result in a substantial reduction in expenditure.

KSA has begun a fundamental policy shift to respond to low oil prices. The government has introduced a series of reforms over the past year and has recently set out plans for a bold and ambitious transformation of the Saudi Arabian economy in Vision 2030 and the National Transformation Program. Diversifying the economy, creating jobs for nationals in the private sector, and implementing a gradual, but sizable and sustained fiscal consolidation to reach budget balance in five years are key policy priorities.

Executive Directors** noted that KSA faces important challenges stemming from the decline in oil prices. They welcomed the authorities’ timely response, which, supported by sizeable fiscal buffers and a strong and resilient financial system, has maintained macroeconomic growth and stability. Nonetheless, the fiscal and current account balances have moved into deficit and growth is starting to slow. Directors highlighted the need for continued fiscal adjustment and reforms to strengthen and transform the Saudi Arabian economy. In this regard, they commended the authorities’ bold reform plans.

Directors welcomed the ambitious reform goals announced by the authorities in Vision 2030 and the National Transformation Program, and underscored the importance of clear prioritisation and sequencing of the planned reforms to reduce implementation risks and give the economy time to adjust. They supported the authorities’ plan to increase the role of the private sector in the economy by focusing on privatisation and public-private partnerships, improve the business environment, develop local capital markets, encourage foreign direct investment (FDI), and support small and medium enterprises. Directors noted that continued labor market and education reforms are needed to encourage private sector employment of Saudi nationals and increase labour force participation of women.

Directors agreed that a gradual but sizable and sustained fiscal consolidation is needed, and welcomed the adjustment under way. They generally agreed that balancing the budget over the medium term is an appropriate goal and encouraged the authorities to develop a credible medium-term plan to achieve this objective. They supported expenditure and revenue reforms, including continued gradual adjustment of energy prices with compensation for lower-income households, introduction of a VAT and excise taxes, containment of the government wage bill, and improved public investment management and spending efficiency. They recommended accompanying these measures with growth-enhancing structural reforms.

Directors emphasised the importance of developing a medium-term fiscal framework and strengthening the annual budget process, with better integration of the Public Investment Fund and Aramco into the budget. They encouraged the authorities to take an integrated asset-liability management approach to financing the fiscal deficit. They noted that government debt issuance would help establish a risk-free yield curve and support the development of domestic debt markets.

Directors noted that reforms have helped strengthen the financial system, and the banking sector is well positioned to weather lower oil prices and slower growth. They encouraged the authorities to continue to closely monitor credit quality, strengthen the macro-prudential framework, and finalise the framework for bank resolution and liquidity provision. They also recommended strengthening the liquidity forecasting and management frameworks of the central bank.

Directors agreed that the exchange rate peg to the US dollar is the best option for Saudi Arabia given the current structure of its economy, and emphasised that a continued fiscal adjustment is needed to support the peg. They saw merit in reviewing the peg periodically to ensure it remains appropriate, given the desired evolution of the economy away from its current reliance on oil.

Directors welcomed the improvements in economic statistics, but noted that further work is needed to fill remaining data gaps. Publication of more detailed budget data and updates would enhance transparency. Directors encouraged the authorities to subscribe to the Fund’s Special Data Dissemination Standard.

*Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

**At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarises the views of Executive Directors, and this summary is transmitted to the country's authorities. Read an explanation of qualifiers used in summings up.

IMF lists policy priorities for Cambodia

An International Monetary Fund (IMF) mission headed by Sonali Jain-Chandra has visited Cambodia from July 6 to July 20, 2016 to conduct the annual Article IV staff discussions*. During the visit, the mission assessed macroeconomic developments and held policy discussions with ministers and senior officials of the Royal Government of Cambodia, and met a wide range of stakeholders, including representatives of business community, NGOs, and development partners. At the conclusion of the visit, the mission issued the following statement:

“Cambodia is a fast-growing, highly open economy, and just attained lower-middle-income status. In 2015, economic activity remained strong, while inflation rose moderately. Growth is projected to remain robust around 7% for 2016 to 2017, supported by strong garments exports, real estate and construction activity as well as the reduction in oil prices. Over the medium term, growth is projected to slow to around 6¼%  (by 2021) due to a gradual reduction in foreign direct investment (FDI), challenges in export diversification, and a moderation in the credit cycle. Inflation is projected to rise to 3.2% by end-2016 due to a pickup in food prices.

"The current account deficit (CAD) is projected to narrow in 2016 to 9.7% of GDP, from 10.7% in 2015, due to robust garments exports and reduced imports following the completion of major hydro projects. FDI and official sector flows are expected to continue financing most of the CAD over the medium-term.

“The main downside risk to the outlook arises from rapid credit growth, increasingly concentrated in real estate, which threatens to undermine economic and financial stability. External risks include a significant slowdown in China, an appreciating US dollar, weaker growth in Europe and increased uncertainty from the Brexit referendum result, and a sharper-than-anticipated tightening in global financial conditions...The key policy challenges are to secure sustained growth and mitigate growing financial sector vulnerabilities, along with continuing efforts to meet the sustainable development goals and promote inclusion."

The mission also noted that Cambodia is still vulnerable to shocks, and made several recommendations:

“Over the last two decades, Cambodia grew rapidly, its integration with the global economy increased sharply and poverty has fallen significantly. Going forward, Cambodia’s strategic location, China’s changing trade patterns, and ongoing regional integration provide further opportunities to build on this success. Important steps have been taken by the government that will help Cambodia capitalize on these opportunities. Nonetheless, further measures are needed to boost productivity, increase competitiveness, and ensure that the benefits of growth are widely shared. Our discussions covered a range of policies to overcome structural growth barriers and vulnerabilities, including a narrow economic base, weak business climate, high dollarisation, and underdeveloped financial markets. These structural features constrain Cambodia’s growth potential and render the economy and financial system vulnerable to shocks.

"Priorities include reducing energy costs and improving reliability, enhancing transportation links, addressing skills gaps via improving the quality of education and promoting technical and vocational training, as envisioned in the Industrial Development Policy launched by the government in 2015. Efforts should also be expedited further to develop and deepen financial markets, to boost investment efficiency and facilitate macro-economic management."

*Under the Article IV consultation, IMF staff undertakes annual surveillance and analysis of economic developments and policies of member countries for discussion by the Executive Board. The last Article IV consultation discussion with Cambodia took place in July 2015.

Markus Rodlauer, Deputy Director of the Asia Pacific Department of the IMF, joined the mission during the second week.

UAE dealing well with lower oil prices: IMF

On July 20, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation* with the UAE.

According to the IMF persistently lower oil prices continue to weigh on economic sentiment and fiscal and external positions, but large buffers built over time have provided ample policy space, limited negative inward spillovers and contained the weakening of investor appetite.

Non-oil economic activity has slowed to 3.7% in 2015, driven by a contraction of public investment in the context of fiscal consolidation, and lower contribution from domestic private demand. Negative effects on overall growth were partially offset by the increase in oil production. Despite the strong fiscal policy response to adjust to lower oil prices, the fiscal balance turned to a deficit of 2.1% of GDP, while the current account surplus declined to 3.3% of GDP. Banks remained well-capitalised and liquid, though pressures on profitability are emerging as asset quality weakens due to the economic slowdown and rising funding costs.

The IMF expects economic activity to moderate further in 2016, before improving over the medium term. Non-hydrocarbon growth is projected to slow to 2.4 % in 2016 due to fiscal consolidation, the stronger dollar, and tighter monetary and financial conditions. Over the medium-term, non-hydrocarbon growth is forecast to increase to above 4% as the dampening effect of fiscal consolidation is offset by improvements in economic sentiment and financial conditions due to oil price rises, a pickup in private investment in the run-up to the Expo 2020, and stronger external demand.

Executive Board Assessment**

Executive Directors welcomed the United Arab Emirates’ resilience to the oil price shock. Directors commended the authorities for their prudent policies, which helped build large fiscal and external buffers and strengthened the economy. Nevertheless, persistent lower oil prices continue to pose challenges. Directors underscored the need for sustained sound macroeconomic policies to reduce fiscal vulnerabilities, safeguard financial stability, and promote long-term growth.

Directors welcomed the authorities’ commitment to pursue fiscal consolidation. For the near term, in light of the ample buffers, they generally considered a gradual adjustment effort to be appropriate in order to minimise the negative impact on growth. However, stronger fiscal consolidation will be needed over the medium term to ensure inter-generational equity.

Directors encouraged the authorities to diversify revenues and rationalise current spending, while further strengthening public financial management. They welcomed the plans to introduce a VAT and increase excise taxes, which could be followed by a corporate income tax. Directors also recommended phasing out remaining energy subsidies, while protecting the vulnerable. Priority should also be given to curb other current spending, while preserving public investment and enhancing its efficiency. Directors noted that developing a consolidated forward-looking medium-term fiscal framework would assist the authorities in setting direction for fiscal policy, and in aligning resource allocation with the UAE 2021 vision. They encouraged the authorities to strengthen the debt management framework to better account for contingent liabilities from government-related entities and public-private partnerships.

Directors noted that the dirham peg to the US dollar remains an appropriate anchor for price and financial stability. They supported continued efforts to enhance the monetary framework, particularly by improving liquidity management. Directors encouraged further steps to develop domestic debt markets and reduce private sector foreign exchange exposure. They also encouraged the authorities to tap into sovereign wealth funds and international capital markets to finance the deficit.

Directors welcomed the ongoing revision of the central bank and banking law and plans to strengthen banking regulation and supervision. They emphasised that the new law should further enhance central bank independence and governance, align the macroprudential institutional framework with best practices, upgrade banking sector regulation and supervision in line with global standards, strengthen safety nets, and improve the resolution framework. Directors encouraged the authorities to implement their plans to phase in the Basel III capital framework, enforce loan concentration limits, strengthen corporate governance, and move toward risk-based supervision. They supported ongoing efforts to strengthen the anti-money laundering and countering financing of terrorism (AML/CFT) framework and address de-risking.

Directors commended the efforts to further diversify the economy away from oil. They encouraged continued action to increase productivity and foster competitiveness. Efforts should continue to improve the business environment, ease restrictions on foreign direct investment (FDI) in the new investment law, and spur competition. In addition, priority should be given to upgrading the quality of education, promoting innovation and entrepreneurship, and facilitating SMEs’ and startups’ access to finance, notably through an approval of the bankruptcy law and further broadening the credit bureau’s coverage.

*Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

**At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. Read the qualifiers used in summaries.

IMF expects economic growth in the Kyrgyz Republic to reach 2.2% in 2016

An International Monetary Fund (IMF) mission led by Edward Gemayel visited Bishkek in the Kyrgyz Republic from July 8 to 14 to take stock of the latest economic developments and prepare the ground for the third review mission under the Extended Credit Facility (ECF), tentatively scheduled for the second half of September.

At the conclusion of the visit, Gemayel issued the following statement, which conveys preliminary findings after the visit, and do not necessarily represent the views of the IMF’s Executive Board:

“After a difficult start of the year, the pressures on the economy are beginning to moderate, helped by a stabilising regional context. In the first half of 2016, overall and non-gold growth reached -2.3% and 1.2% year-on-year, respectively. Inflation is subdued at 1.3% year-on-year, at the end of June, whereas the som (Editor's note: the som is the currency of the Kyrgyz Republic) has appreciated by 11.3% by early July. For 2016 as a whole, growth is expected to reach 2.2%, while inflation will remain below 3.5%.

“The government should make every effort to keep the fiscal deficit in 2016 within the budgeted 4.5% of gross domestic product (GDP). Meeting this target will require significant efforts aimed at increasing revenues and controlling expenditures. In this context, the recent introduction of a new VAT exemption on imported grain is counterproductive and should be reversed.

“From 2017 onwards, the budget should continue the path of fiscal consolidation, thereby helping to maintain public debt at a sustainable level. Revenues should benefit from the full effect of measures implemented in 2016 to improve tax policies and administration, in addition to rationalising non-priority expenditures. Refraining from spending pressures will be critical in the run-up to next year’s presidential election.

“The National Bank of Kyrgyz Republic (NBKR) should continue to limit interventions only to smooth excessive volatility and allow the som to move in line with fundamentals. The recent appreciation of the exchange rate calls for a careful foreign exchange intervention policy that strikes a balance between financial sector stability and external competitiveness.

“High banking sector vulnerabilities call for the immediate passage of the Banking Law, given its importance to preserving financial sector stability. The Law is essential to reduce the duplication and contradictions prevalent under the existing regulatory framework and strengthen the independence, governance, and transparency of the central bank. Unfortunately, key provisions aimed at establishing a modern and efficient bank resolution framework and protecting depositors’ rights have been removed from the Law during the second reading. The NBKR should exert every effort to preserve the key features of the Law and bring it in line with international best practice.

“The recent completion of the audits of the Debt Resolution Agency (DEBRA) and the banks under its management, as well as the liquidation of the first two banks are important steps forward. Additional efforts are needed to complete the liquidation of all banks under DEBRA by the middle of next year."

Technavio outlines India fashion e-retail market

• Men’s clothing segment is the dominant shareholder in the market
• Key vendors—Amazon, Flipkart, Snapdeal, Jabong, and Yepme

The availability of a wide array of payment options and products, broader reach, and lower costs are encouraging online shopping for consumers in India, says Technavio’s analysts, who predict that the online fashion retail market in India will grow at a CAGR of almost 17% between 2016 and 2020.

Online shopping sites offer customers the opportunity to choose between a number of payment methods such as debit cards, credit cards, cash on delivery (COD), electronic wallets, smart cards, Internet banking, and demand drafts. Favourable demographic factors, better return policies, and increasing adoption of digital and push marketing by vendors are some of the other factors that will contribute to the growth in the online fashion retail market in India during the forecast period.

“The distribution of users between mobile applications and websites is an ongoing trend in the market. Mobile apps have a tremendous impact on the growth of the online fashion retail market in India as they offer a faster alternative to mobile web browsing for consumers to shop on the go. Key players in the market are coming up with more sophisticated fashion apps designed to leverage each functionality on specific operating systems such as Windows, Android, and iOS. Online retailers are emphasising on finding a balance between mobile applications and websites to cater to the masses who prefer shopping online,” says Brijesh Kumar Choubey, Lead Analyst, Consumer & Retail, Technavio Research.

In 2015, men's clothing online accounted for around 53% of the market share to dominate the online fashion retail market. However, more women in the country are likely to be employed and empowered financially in the coming years, thereby boosting growth in the women’s clothing online segment. Furthermore, hectic lifestyles and time crunch are encouraging women to transition towards online shopping rather than visit brick-and-mortar stores. The availability of premium women’s clothing is also projected to increase purchases and add more revenue by 2020.

The key players in the online fashion retail market in India include Amazon, Flipkart, Snapdeal, Jabong, and Yepme. Intense competition prevails in this market with most players selling broadly similar products. However, the global players like Amazon and eBay are offering an impressive range of fashion products, which has posed a tough challenge for regional players like Flipkart and Snapdeal. According to Technavio, the purchase decision of consumers is price-dependent so vendors need to focus on pricing strategies and the provision of innovative services. Most users prefer COD and conduct a price comparison before making a purchase, the research firm added.

Big gap in health and fitness mobile app market

A report from the Media and Services UX group at Strategy Analytics surveying avid health and fitness consumers using health and/or fitness mobile applications has found that implementing multiple improvements will lead to more useful, usable, and compelling solutions.

Surveying consumers in the US and UK who used at least one health and/or fitness mobile application multiple times per week, Strategy Analytics found that many of these apps catered only had a single focus, such as health (food entry and logging for example), or fitness (tracking a run/walk as an instance). Consumers who were interested in tracking both were forced to seek multiple apps to complement one another, each requiring separate data entry, when what they want is an all-in-one app for health and fitness.

Christopher Dodge, Associate Director, MSX and report author, commented, “As many health and fitness apps currently exist for free, smarter health/fitness app offerings could serve as strong differentiators amongst competing apps and provide an opportunity for a paid health/fitness app – significantly, consumers in this study were willing to pay for this experience.”

Kevin Nolan, VP, UXIP, added, “These apps need to be intelligent enough to learn user behaviour, remind users to interact with the app after a certain amount of time has elapsed, and perhaps more importantly, provide proactive recommendations and suggestions based on user habits and behaviours. This will not only help to motivate the user to achieve their personal goals and adopt a healthier lifestyle far more efficiently, but also enhance the overall user experience of these types of apps.”

Interested?

Buy the report

One Belt, One Road initiative has many advantages for China, says Moody's

The One Belt, One Road initiative (also called Belt and Road, 一带一路) will promote China’s regional integration, says Moody's Investor's Service in a sector report titled One Belt, One Road Is Credit Positive, Despite Rising Overseas Risk Exposure dated 20 July 2015. The company says the initiative as it will improve intra-regional commercial and financial links and boost renminbi internationalisation.

Within China, the report's authors say the initiative will channel investment into China’s underdeveloped inland and western provinces, stabilising widening regional disparities. Financial institutions with regional presence or experience in intra-regional financing will benefit from the One Belt, One Road initiative, as will large, financially strong Chinese corporates.

Geopolitical considerations and the large infrastructure financing requirement are risks to implementation, however.

Interested?

Access the One Belt, One Road Is Credit Positive, Despite Rising Overseas Risk Exposure report (subscription required)
Read the TechTrade Asia blog post about The Media Foundation's plans to leverage on One Belt, One Road

Moody's seminars for Q2 2015

A new crop of Moody's training seminars are now available. All courses are available in-house and customisation can be discussed. Email trainingemea@moodys.com (Middle East) or trainingasiapac@moodys.com (Asia Pacific) with enquiries.

Americas
trainingamericas@moodys.com
1.212.553.3898 

EMEA
trainingemea@moodys.com
44.207.772.1569  
Asia-Pacific
trainingasiapac@moodys.com
852.3551.3159
- See more at: http://www.moodysanalytics.com/Breakout-Info/Public-Seminars/Credit-Reasoning-and-Writing?mkt_tok=3RkMMJWWfF9wsRoivq3JcO%2FhmjTEU5z17%2BgsWK%2B2gIkz2EFye%2BLIHETpodcMT8BnMbDYDBceEJhqyQJxPr3MKtEN0dZ3RhLiAA%3D%3D#sthash.qeMQ7tjt.dpuf

Corporate Credit Rating Analysis

This intermediate level seminar provides delegates with an in-depth understanding of the rating practices employed by the Moody's Investors Service for assessing corporate credit risk – from rating methodologies and financial ratios to a rating committee simulation. 

Location     Date                    Price 

Istanbul       Jul 29-31, 2015     £2,495 

Singapore    Apr 20-22, 2015    US$3,895 

Singapore    Nov 2-4, 2015       US$3,895 

Hong Kong  Nov 16-18, 2015    US$3,895 

Dubai          May 19-21, 2015   US$3,295 

Dubai          Nov 24-26, 2015   US$3,295 

Register here.

Moody's Credit Masterclass

This is an overview seminar that brings participants through all stages of the credit process – from obligor analysis, making credit decisions, monitoring credits, and identifying and acting on the early warning signs of deteriorating credit quality, to managing problem credits and mitigating loss during debt restructurings and workouts. 

The course will draw on the insight, research, and rating methodologies of Moody's, and participants will be given practical tools which will serve as work aides when they are back in the field.

Location     Date                    Price 

Dubai          May 10-14, 2015    US$4,995

Register here.

Fundamentals of Corporate Credit 

This seminar provides participants with a foundation of skills that helps them reach sound, reliable judgments of a company's creditworthiness. Applying a structured framework, delegates will be able to identify and assess key qualitative and quantitative factors in determining credit risk. 

Location     Date                         Price  

Hong Kong   May 18-21, 2015        US$4,395 

Sydney        Aug 31-Sep 3, 2015    US$4,395 

Singapore    Dec 8-11, 2015           US$4,395 

Dubai          Jun 14-17, 2015         US$4,395

Register here.

Covenants and Documentation 

The seminar will focus on covenants and other features designed to protect investor interests and emphasise ways in which these defensive tools can be undermined by creative drafting. Moody's methodology for evaluating covenants in bond indentures will be discussed, and participants will learn how Moody's framework for assessing covenant quality can be applied to their daily work. 

Location     Date               Price  

Hong Kong   May 15, 2015   US$1,695 

Sydney        Oct 16, 2015    US$1,695 

Singapore    Nov 5, 2015      US$1,695

Register here. 

Corporate Credit & Cash Flow Analysis 

This seminar explores the importance of cash flow analysis in the credit assessment process. In addition, it reviews credit risk issues of companies with international activities and the challenges of dealing with off-balance sheet and contingent liabilities. It also introduces the concepts of corporate valuation and its usefulness for assessing company solvency.

Location      Date               Price 

Singapore    Jun 3-5, 2015  US$3,895

Register here.

Corporate Credit & Cash Flow Analysis

Hong Kong May 15, 2015  USD 1,695 Sydney  Oct 16, 2015  USD 1,695 Singapore  Nov 5, 2015  USD 1,695 - See more at: http://www.moodysanalytics.com/Breakout-Info/Public-Seminars/Covenants-and-Documentation?mkt_tok=3RkMMJWWfF9wsRoivq3JcO%2FhmjTEU5z17%2BgsWK%2B2gIkz2EFye%2BLIHETpodcMT8BnMbDYDBceEJhqyQJxPr3MKtEN0dZ3RhLiAA%3D%3D#sthash.ddSzN2rB.dpuf

Location Date Price  Hong Kong  May 18-21, 2015  USD 4,395 Sydney  Aug 31-Sep 3, 2015  USD 4,395 Singapore  Dec 8-11, 2015  USD 4,395 - See more at: http://www.moodysanalytics.com/Breakout-Info/Public-Seminars/Fundamentals-of-Corporate-Credit#sthash.dOXMvXC9.dpuf

Dubai  May 10-14, 2015  USD 4,995

Dubai  May 10-14, 2015  USD 4,995

Xaxis Prime combats digital ad fraud

Xaxis, one of the world's largest programmatic* advertising platforms, is addressing ad fraud what it says is the ad industry’s first fully programmatic product to guarantee human viewership for advertisers’ digital brand campaigns. 

Xaxis Prime extends beyond pre-bid analysis** and post-campaign blacklisting to dynamically identify and block robot traffic and suspicious sites, the company said. Existing fraud prevention safeguards have been combined with new technologies including a proprietary human verification tool based on internal and partner technology from Adara, Solve Media and Moat.

Types of fraud Xaxis Prime protects against include botnets, ad insertion or redirection, CMS/OS hacking, robots designed to behave like humans and robot retargeting. In addition to helping advertisers, the new product introduces several powerful new tools for Xaxis’ publisher partners to ensure only humans are viewing their inventory. These include proprietary, internal detection processes and integrated third party verification tools. These tools enable Xaxis to provide feedback to publishers on the inventory posing the most risk, allowing them to identify the cause and eradicate it prior to selling to Xaxis or other buyers. 

One way that Xaxis Prime guards against fraud is through tracking genuine visitors through answered captchas, completed transactions or specific human behaviours such as creative engagement and social sharing. These verified visitors are then cross-referenced in the Xaxis data management platform (DMP) against pre-bid impression evaluations and post-bid analysis of traffic metrics to provide an assurance that the traffic is indeed human.

At rollout, Xaxis Prime delivers a no-fraud guarantee across the Xaxis Marketplace. In addition to the proprietary human verification tool, Xaxis Prime guarantees 90% viewability, 95% brand safety and includes ongoing audits of all inventory, pre-bid impression evaluation, post-campaign reporting to validate inventory and audience that was acquired.

“Xaxis Prime represents the next step in our ongoing efforts and investment to combat digital ad fraud and ensure our clients achieve the highest possible real performance,” said Larry Allen, SVP of Business Development at Xaxis. 

“Ad fraud is an international problem impacting both advertisers and publishers. With Xaxis Prime, brands get a simple and powerful guarantee for their digital brand advertising across the top premium publishers.” 

*Programmatic technology allows advertisers to bid for the privilege to display an ad based on various rules, such as the types of viewers or the type of content displayed on a page. 

  

**Data can be pre-qualified before a bid is placed so that bids on fraudulent inventory are avoided or minimised.