From the IMF: Slowing Global Economic Growth is Increasingly Evident, High-Frequency Data Show11/15/2022 "Global economic growth prospects are confronting a unique mix of headwinds, including from Russia’s invasion of Ukraine, interest rate increases to contain inflation, and lingering pandemic effects such as China’s lockdowns and disruptions in supply chains." Read more here.
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From the Financial Times.... The UK's recent disastrous "mini" Budget can trace its origins back to Britain's decision to leave the European Union. The economic costs of Brexit were masked by the Covid-19 pandemic and the crisis in Ukraine. But six years after the UK voted to leave, the effect has become clear. In this film, senior FT writers and British businesspeople examine how Brexit hit the UK economy, the political conspiracy of silence, and why there has not yet been a convincing case for a 'Brexit dividend'
Watch the video here The broken US economy breeds inequality and insecurity. Here’s how to fix it -James K Galbraith10/10/2022 "Rising interest rates, a falling stock market, a seesaw in the price of gas, a high dollar and chaos in world finance – we see in all this, once again, the folly of trying to run the world’s largest economy through a central bank. It’s time to rethink the basics: what has happened in America? And what should be done?" Read more here.
"Inflation in some economies is rising at the fastest pace in four decades, while tight labor markets have boosted pay gains. That has raised concerns that these conditions could become self-reinforcing and lead to a wage-price spiral—a prolonged loop in which inflation leads to higher wage growth, fueling even higher inflation.
An examination of recent wage dynamics and the prospect of such a wage-price spiral are the subjects of an analytical chapter of our latest World Economic Outlook, which finds that, on average, the risks of a spiral are limited—so far. Three factors are working together to contain the risks: the underlying shocks to inflation are coming from outside the labor market, falling real wages are helping to reduce price pressures, and central banks are aggressively tightening monetary policy." Read more here on the IMF blog. "Last week, the US got another bad inflation report. The headline annual inflation rate declined from 8.5 percent to 8.3 percent, driven by the plunging cost of gasoline. But core inflation—a measure that excludes volatile food and energy prices—rose from 5.9 percent to 6.3 percent, signaling that the nation’s inflation problems are far from over.
In this article we’ll use charts to explore the many facets of America’s inflation mess. We’ll examine the forces that caused prices to shoot up last year, and look at how those increases have played out in different sectors across the economy." See those charts here. "Our sudden, shocking encounter with high inflation has brought to light a disturbing truth: we now have a dysfunctional economy, in which big business has gained too much power over the prices it can charge, while the nation’s households have lost what power they had to protect their incomes from inflation.
It has also revealed the limitations and crudity of the main instrument we’ve used to manage the macro economy for the past 40 years: monetary policy – the manipulation of interest rates by the central bank." Read more here. "Global inflation was generally moderating when the pandemic began, and the downward trend continued into the early months of the crisis. But surging prices since late 2020 have pushed inflation steadily higher. The average global cost of living has risen more in the 18 months since the start of 2021 than it did during the preceding five years combined.
Food and energy are the main drivers of this inflation, as our Chart of the Week shows." Read more on the IMF blog here. The maker of butter brand Lurpak has said it expects dairy prices to remain high due to a decline in global milk production and soaring costs.
Read here. Read about it here
"The Japanese government has been hit in the pocket by an unusual problem -- its young people aren't drinking enough. Since the pandemic began, bars and other premises selling alcohol have been hit hard by Covid-19 restrictions, causing sales -- and liquor tax revenues -- to plummet in the world's third-largest economy." Read more here.
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Maree SpraggonTeacher of IB Economics at the American School of Budapest Archives
February 2024
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