Since the Fed’s July meeting, when the Fed Funds Rate had a 0.25% cut, fears about the impact of the US-China trade war on the global economy have escalated. The US yield curve inversion received much attention as a harbinger of a slowdown in the global and US economic outlooks. We approach here whether lights on next monetary policy events can be obtained from reading the minutes of the Fed’s meeting – and of the July meeting of the ECB governing council – released this week.
La création d’instruments financiers à la Conférence de Bretton Woods, à la fin de la Seconde Guerre mondiale, était une nouveauté pour l’époque et avait sonné la fin du chacun pour soi « monétaire », en jetant les bases d’un système de changes fixes mais ajustables reconnaissant, cependant, et dès le départ, la primauté du dollar de la nouvelle grande puissance.
Brazil's economic recovery after the deep 2015-16 recession has been the slowest on record, with GDP per capita last year remaining more than 9% below its pre-crisis peak (Chart 1, right side). The IMF's annual report on the country's economy, released two weeks ago, estimated current GDP to be nearly 4% below its potential level, which suggests insufficiency of aggregate demand (Chart 1, left side). On the other hand, as the slow recovery reflects structural factors, it is necessary to avoid the use of measures to reinforce such demand that might run against the confrontation of such problems.
Africa is experiencing a demographic boom, so as its population is expected to double by 2050 to reach 2.8 billion. The growth in Africa’s working-age population will be inevitable. The youth population will also grow to make of Africa the continent of youth ‘par excellence’, so as it will hold the largest number of young people in the globe.
Are the relationships between global commodity markets and the developing economies that export them being properly analyzed? After more than half a century of economic research on this issue, the answer, paradoxically, remains uncertain. While the well-known "natural resource curse" tells us that the exploitation of a nation's geological endowment often leads to the implementation of inappropriate economic policies, corruption and rent-seeking strategies, or even to conflicts and civil wars, "Dutch disease" suggests that the economic development of extractive sectors can lead to a deterioration in national price competitiveness and, as a result, to macroeconomic vulnerability. The so-called Prebisch-Singer hypothesis, formulated in 1950, shows, for its part, that the terms of trade for commodity exporting countries deteriorate over time. While these different approaches have been the subject of the most serious empirical tests, the implicit assumption on which they are based still surprises, namely that of being able to apprehend raw materials as a homogeneous whole. They are anything but the latter.
“Teach a parrot the terms ‘supply and demand’ and you’ve got an economist.” That parrot can explain to us what is happening with commodity prices (Chart 1, left side). That is, while agricultural and industrial metal prices - particularly copper - plummeted on average by over 10% since June, energy prices - especially oil - have risen nearly 20% since the beginning of the year. Brent's barrel price is now triple what it was in early 2016. Check the latest World Bank Commodities Price Data (The Pink Sheet) here.
Depuis la fin de l’année 2017, le président Donald Trump mène plusieurs batailles commerciales, contre différents partenaires, sous prétextes de sauver des emplois industriels américains et de réduire le déficit commercial des États-Unis. S’il est difficile de se prononcer sur les effets des combats commerciaux amorcés par le président Trump, l’importance des opposants et des échanges pour l’économie mondiale en fait une source de risque pour la croissance, les emplois et les prix à l’échelle planétaire.
The spike in US bond yields since mid-April in tandem with the strengthening of the dollar sparked a retrenchment of capital flows to emerging markets (EM), accompanied by a sell-off of assets in some cases. Argentina and Turkey suffered from strong and potentially disruptive exchange rate depreciation pressures in May, with financial markets calming down only after bold domestic policy moves (interest rate hikes in both countries and, in the case of Argentina, a decision to seek a new loan from the International Monetary Fund - IMF).