Emerging inflationary pressures and policy dilemma
Since the beginning of 2021, the world economy has been facing emerging upward inflationary pressures. For several countries, price dynamics became more worrying. By April, central banks in Belarus, Brazil, Georgia, Russian Federation, Turkey and Ukraine hiked policy interest rates, tightening policy stance to contain surging consumer prices. In the United States, policy debates on inflation are back. Some critics argued that the $1.9 trillion stimulus package rolled out in March will intensify inflationary pressures. While the policymakers in the United States are monitoring inflation closely, global financial markets are already factoring…
World Economic Situation And Prospects: May 2021 Briefing, No. 149
Adding fuel to the fire? Inequality and the spread of COVID-19
The World Health Organization officially declared COVID-19 a ?pandemic? one year ago. Since then, the virus has spread like wildfire, upending social and economic life and causing an enormous?and still rising?human toll. As of 19 March 2021, the COVID-19 pandemic had infected more than 122 million people and killed about 2.7 million worldwide. Furthermore, while the vaccination campaigns gain pace globally?more than 400 million single doses have already been administered?the prospects to bring the pandemic to an end and achieve herd immunity are still uncertain. Virus mutations, pandemic fatigue and the uneven global…
World Economic Situation And Prospects: April 2021 Briefing, No. 148
The World Economic Situation and Prospects (WESP) 2021 addresses the issue of increasing levels of fiscal deficits and public debt, among other topics. To build back better through the SDGs, fiscal policy needs to play an active role. The pandemic?s remaining uncertainties require additional fiscal measures beyond the stimulus measures implemented last year. Such actions are required to prevent the world economy from another implosion of aggregate demand. Governments still need to combat the COVID-19 pandemic and act to alleviate the pandemic?s socioeconomic impact?rising unemployment, poverty, and inequality. Total public debt globally is projected to grow further this year, well beyond…
World Economic Situation And Prospects: March 2021 Briefing, No. 147
Global economic recovery remains precarious ? the projected rebound of 4.7 per cent will barely offset 2020 losses
Global economic outlook
The World Economic Situation and Prospects (WESP) 2021 warns that the COVID-19 pandemic, which has delivered a heavy blow to economic activities worldwide, may exert devastating long-run socio-economic effects, unless global policy responses can ensure a robust and sustainable recovery. Those actions should comprise smart investments in economic, societal and climate resilience, revitalization of global trade, avoidance of premature austerity policies and addressing widening inequalities.
In 2020, world output shrank by 4.3 per cent, over three times…
World Economic Situation And Prospects: February 2021 Briefing, No. 146
As the COVID-19 pandemic outbreak in March 2020 threatened to drag the global economy into a deep and protracted crisis, central banks once again became the first line of defense for countries across the world. In 2020, about 94 monetary authorities have cut their policy rates, often at emergency meetings. Amid acute stress in financial markets, central banks also swiftly deployed a wide range of policy measures, aimed at preventing a liquidity crunch and supporting credit flows.
With interest rates near the zero bound, central banks in the major developed economies largely responded to the crisis through the introduction of quantitative easing measures on an unprecedented scale. The United…
World Economic Situation And Prospects: January 2021 Briefing, No. 145
Momentum for greater climate action sustained under the COVID-19 crisis
Due to the COVID-19 pandemic crisis, the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) has been postponed from November 2020 to November 2021. Despite this postponement of the supreme decision-making body of the UNFCCC, the momentum for much greater climate action and ambition continues. Recently the European Union (EU), Japan and the Republic of Korea, along with more than 110 other countries, have pledged to achieve carbon neutrality by 2050, while China was set to join them by 2060. By now, 50 per cent of the world?s gross domestic product (GDP) and half…
World Economic Situation And Prospects: December 2020 Briefing, No. 144
The European Central Bank?s unconventional policies?is hyperinflation looming?
Monetary policy across the world has entered ever more uncharted territory over the past years. Gone are the times when changes in policy interest rates were the sole policy variable of public and financial market attention. Today, central bank announcements are as much or even more about unconventional policy tools?such as asset purchase programmes?than they are about interest rates. The European Central Bank (ECB) is no exception in this regard. In reaction to the COVID-19 crisis, it has initiated massive asset purchases, which come on top of similar such programmes over the past years and besides significant…
World Economic Situation And Prospects: November 2020 Briefing, No. 143
Public finances after COVID-19: is a high-debt, low-growth trap looming for developing countries?
The COVID-19 pandemic has triggered unprecedented policy responses around the world. Governments of developed and developing countries have taken extraordinary steps to halt the spread of the virus and limit the economic and social fallout from the crisis. In the face of rapidly declining private sector demand, public support in the form of monetary and fiscal stimulus has been vital to avert economic collapse. However, the massive interventions have left governments with record debt burdens and major fiscal challenges going forward.
The situation is especially precarious among developing…
World Economic Situation And Prospects: October 2020 Briefing, No. 142
The collapse of global trade and implications for developing regions
Global trade in goods and services tumbled in 2020
International trade sputtered to a halt in the first half of 2020, as the novel coronavirus pandemic prompted widespread lockdowns, curtailed factory output, disrupted transportation and depressed demand. Global merchandise trade shrank by 3 per cent year-on-year in the first quarter of 2020, according to the World Trade Organization (WTO) (figure 1). Compared with the preceding quarter, trade volume shrank by 2 per cent in seasonally adjusted terms. Global services exports fell harder, by 7.6 per cent year-on-year in the same period and contracted by 7.3 per cent compared…
World Economic Situation And Prospects: September 2020 Briefing, No. 141
Varying impact of the COVID-19 pandemic on the labour markets of developed countries
The outbreak of the COVID-19 pandemic and the resulting severe restrictions on economic and social activities had a profoundly disruptive impact on labour markets in virtually every part of the world, including in the OECD countries?the group mostly characterised by high-income, industrially-advanced and diversified economies, which includes, among others, the United States, CANZ group of countries, most of the European Union (EU) and Japan. The aggregate OECD unemployment rate stood at 5.2 per cent in February 2020, as several OECD member states entered 2020 with historically low unemployment figures, but…
World Economic Situation And Prospects: August 2020 Briefing, No. 140
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