The revival and changing nature of industrial policy
Industrial policies are gaining increasing relevance, becoming centrepieces of many government policy agendas. These policies aim at changing the structure or sectoral composition of the economy in line with strategic and medium-term goals, such as export diversification, technology upgrading and industrialisation. As such, industrial policies include a broad range of issues, including ?infant industry? support, science, technology and innovation (STI) policies, trade and foreign direct investments policies and intellectual property rights, public procurement policies, and policies shaping the allocation of financial resources (Chang,…
World Economic Situation and Prospects: November 2023 Briefing, No. 177
Labour markets in developed economies ? signs of stabilization?
During the first three quarters of 2023, the state of labour markets in the developed economies continued to return to their pre-pandemic conditions, at least in terms of key headline indicators. The post-pandemic rebound in employment in these economies were quite swift, compared with the protracted labour market recovery that followed the global financial crisis of 2008?2009. Since early 2021, many developed economies, with the exception of the United Kingdom, saw a continuing decline in unemployment rates (figure?1), while the employment rates that reflect economic activity of the population reached historically high levels…
World Economic Situation and Prospects: October 2023 Briefing, No. 176
The need for energy transition
Energy transition is at the core of fighting against climate change and achieving net-zero by 2050. It refers to the global energy sector?s shift from a fossil-fuels based energy system to one that is based on renewable sources such as solar and wind. It is a systemic change that involves a structural transformation in the production and consumption of energy. Therefore, it requires significant amounts of investment in energy transition technologies which includes power generation, storage and distribution, energy efficiency, electrified transport and district heat, hydrogen, and carbon capture and storage (CCS) (IRENA, 2023a). A truly net-zero economy also…
World Economic Situation and Prospects: September 2023 Briefing, No. 175
Recent trends in domestic food prices
Food prices surged over the past few years owing to multiple shocks. Between 2019 and 2021, extreme weather events and supply chain disruptions derived from the pandemic drove up domestic food price inflation (measured as a component of the Consumer Price Index) in many countries. In 2022 domestic food inflation became more common across the world, reaching multi-decade highs in several countries amid the spillover effects of the war in Ukraine, higher international commodity prices and a surging US dollar. Headline inflation also rose significantly in most economies, in part due to the importance of food and energy in the consumption basket. While…
World Economic Situation and Prospects: August 2023 Briefing, No. 174
Supply chains for microchips
Increasing use of microchips in daily life
Microchips, sometimes also referred to as semiconductors, are central to modern electronics. They are virtually ubi?quitous in people?s daily lives, being present in smartphones and other consumer products, industrial machines and military systems (figure 1). Leibovici and Dunn (2021), based on industrial information in the United States, estimate that about 25 per cent of 226 manufacturing industries use semiconductors as a direct input; these industries represent 39 per cent of all manufacturing output. These rates are expected to increase quickly over time. More importantly, microchips are essential for countries to…
World Economic Situation and Prospects: July 2023 Briefing, No. 173
Prospects for a robust global recovery remain dim
Global growth remains subdued
The world economy is facing severe headwinds amid weak growth prospects, elevated inflation and heightened uncertainties. A confluence of factors, including legacy effects of the COVID-19 pandemic, the protracted war in Ukraine, the ever-worsening impacts of climate change, and rapidly shifting macroeconomic conditions, are weighing on the global outlook. Stubbornly high inflation in both developed and developing countries has prompted the most aggressive interest rate hike cycle in decades, causing financial conditions to tighten and exacerbating debt vulnerabilities. While economic prospects remain subdued,…
Prospects for a robust global recovery remain dim
Global growth remains subdued
The world economy is facing severe headwinds amid weak growth prospects, elevated inflation and heightened uncertainties. A confluence of factors, including legacy effects of the COVID-19 pandemic, the protracted war in Ukraine, the ever-worsening impacts of climate change, and rapidly shifting macroeconomic conditions, are weighing on the global outlook. Stubbornly high inflation in both developed and developing countries has prompted the most aggressive interest rate hike cycle in decades, causing financial conditions to tighten and exacerbating debt vulnerabilities.
While economic prospects remain subdued,…
World Economic Situation and Prospects: June 2023 Briefing, No. 172
World Economic Situation and Prospects: April 2023 Briefing, No. 171
Is the monetary tightening cycle in developing countries coming to an end?
Monetary policy challenges in developing economies
With the banking sector turmoil rattling global financial markets in recent weeks, all eyes have been fixed on the United States Federal Reserve (Fed). By deciding to raise its key policy rate by another 25 basis points in late March, the Fed signaled that the fight against inflation was not over yet, while underscoring confidence in the resilience of the domestic banking sector. The latest rate hike?the ninth during the past 12 months?brings the target range of the fed fund rate to 4.75?5.00 per…
World Economic Situation and Prospects: April 2023 Briefing, No. 171
Economic consequences of the lingering war in Ukraine
After a year, the war in Ukraine is still raging, imposing a heavy human toll, causing a massive devastation in the conflict area, and posing a grave threat to global security. The economic impact of the war is reverberating worldwide, contributing to inflationary pressures, and impeding the post-pandemic recovery. The war led to elevated energy prices and exacerbated food shortages in many regions. The repercussions of the conflict are being felt both in developed economies, especially in Europe, which has been confronted with skyrocketing energy prices, threats to its energy security, and inflow of the Ukrainian refugees, and in…
World Economic Situation and Prospects: March 2023 Briefing, No. 170
The world economy faces multiple mutually reinforcing shocks
A series of severe and mutually reinforcing shocks hit the world economy in 2022, as it approached the mid-point for achieving the Sustainable Development Goals (SDGs) by 2030. While the impacts of the COVID-19 pandemic continue to reverberate worldwide, the war in Ukraine unleashed a new crisis, disrupting food and energy markets and exacerbating food insecurity and malnutrition in many developing countries. High inflation is eroding real incomes, triggering a global cost-of-living crisis that has pushed millions into poverty and economic hardship. At the same time, the climate crisis is taking a heavy toll on many countries,…
World Economic Situation and Prospects: February 2023 Briefing, No. 169
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