What's Changing? - Economics

Please see below selected recent economic developments.

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January 2025

China’s trade surplus reached nearly US$1 trillion in 2024, far outpacing any trade surpluses recorded globally over the past century.

May 2024

The global financial system faces a tectonic shift, threatening fragmentation. Long dominated by the US, the system that "touches virtually every aspect of economic life" is splintering into smaller, independent systems, claimed The Economist. As financial centres in Asia catch up to New York and London, and countries developing their financial infrastructure, increasingly divided competing blocs are forming.
According to the International Monetary Fund, India’s nominal GDP would top US$4.34 trillion in 2025 slightly above Japan’s projected $4.31 trillion. The subcontinent’s GDP already overtook that of the United Kingdom in 2022 and grew by 7.8% in 2023. India's economic ascent has been powered by strong domestic demand. It experienced double-digit growth in its steel, cement, and automobile manufacturing sectors. India now uses its Rupee rather than the dollar for trading with 27 countries, and its 134 billion online transactions account for 46% of all global digital payments.

October 2023

The World Bank cut its forecast for China’s growth for 2024 and warned that east Asia’s developing economies are set to expand at one of the lowest rates in five decades, as US protectionism and rising levels of debt pose an economic drag.

July 2023

India is on its way to becoming the world’s second-largest economy. It may not be until 2075, but by that time, Goldman Sachs predicts that the country’s GDP will outpace the US’s.
The IMF found that corporate profits had accounted for 45% of Europe’s inflation since the start of 2022.
OECD countries saw a 3.6% annual decline in real wages in Q1 of 2023.

April 2023

Outgoing World Bank President David Malpass revised upwards the international lender’s 2023 global growth outlook, from 1.7% to 2%. He credited China’s improved economic trajectory for the change. However, The International Monetary Fund forecast the world’s economy would grow just 3% annually until 2028, its weakest projection since 1990.

December 2022

Further reading:

October 2022

Global shares dropped by c. 25% in dollar terms in 2022, the worst year since at least the 1980s, and government bonds were on course for their worst year since 1949. Alongside some US$40trn of losses there was a queasy sense that the world order is being upended as globalisation heads into retreat and the energy system is fractured after Russia’s invasion of Ukraine.

September 2022

The OECD slashed its 2023 growth forecast. Russia’s invasion of Ukraine will cost the global economy an estimated US$2.8 trillion, according to the organisation.

June 2022

Further reading:

May 2022

Big shocks to the global economy, such as Russia’s invasion of Ukraine, capture the most attention, but a new worldwide pattern of “little fires everywhere” may be equally consequential for longer-term economic well-being. Over time, these small fires can coalesce into one that is just as threatening as the initial large fire that acted as the catalyst. As Michael Spence, the Nobel laureate economist and an expert on growth and development dynamics, pointed out, the probability of simultaneous growth, energy, food, and debt crises is worryingly high for many developing countries. If that nightmare scenario materialised, the effects would be felt far beyond individual developing countries - and would extend well beyond economics and finance.

April 2022

TIGER - a global index tracking global economic recovery and set up by the Brookings Institution and the Financial Times - warned that stagflation might affect most economies in 2022 as the war in Ukraine exacerbates a slowdown in the global post-pandemic recovery. The International Monetary Fund meanwhile lowered its growth forecasts for 143 of the world’s economies, representing 86% of global GDP.
US economic growth shrank by 1.4% year-on-year in the first quarter of 2022, the first contraction since the pandemic began.

January 2022

The World Bank expected the global economy to grow by just 4.1 percent in 2022, 1.1 percentage points less than in 2021, amid a pandemic-related slowdown that will hit developing countries the hardest. COVID variants, inflation, supply-chain woes, and less government stimulus are to blame.
The US and China are dragging down the world economy, warned Quartz. The IMF lowered its prediction for global growth in 2022, in part because of slowdowns in the globe’s two largest economies.
Yet the US economy grew 5.7 percent in 2021 compared to the previous year, the biggest annual expansion in almost four decades. While this was good news for the Biden administration, GDP growth was expected to slow down in 2022 due to high inflation, supply chain issues, and looming interest rate hikes.
Meanwhile, China’s GDP could grow on average 5.9 percent per year until 2025, according to the Center for Economics and Business Research, which predicts that China will overtake the US as the world’s largest economy by the end of the decade. The Chinese economy was worth $18 trillion in 2021, compared to America’s $23 trillion, noted GZERO.

December 2021

The International Monetary Fund (IMF) said that global debt surged to US$226t - its biggest one-year jump since World War Two. IMF officials said that the COVID-19 pandemic caused debt to hit 256% of global GDP in 2020, an increase of 28%. Government borrowing accounted for slightly over half of the US$28t increase, but private debt among non-financial corporations and households also hit new highs. The IMF added that advanced economies and China accounted for 90% of the rise, enabled by low-interest rates. Debt rose less in other developing countries, which were hampered by often higher borrowing costs and limited access to funding.
By the end of 2021, over 1 billion people across 25+ countries were suffering from double-digit inflation of their currency. At the minimum listed 10% inflation, their purchasing power would halve in just 8 years. As many countries experienced high inflation, people would be likely to increasingly look for other stores of value, which according to CB Insights which may drive crypto adoption.

October 2021

The International Monetary Fund said the global economic recovery was stalling. The IMF cut its growth forecast and warned about diverging paths for rich and poor countries.

July 2021

The International Monetary Fund estimated that global growth for 2021 would be about 6%, but with some countries growing faster and others more slowly. The relative lack of vaccine access in developing countries and the rapid spread of the COVID-19 Delta variant threatened to slow the recovery's momentum.
The Economist called the global economic recovery fast, furious and fragile. Any escape from COVID-19 is a cause for celebration. But today’s booming economy is also a source of anxiety, because three fault lines lie beneath the surface. The first divides the jabs from the jab-nots. Only those countries getting vaccinations into arms will be able to tame covid-19. The second runs between supply and demand, including bottlenecks and imbalances as economies open up. And the last is over the withdrawal of stimulus. Rich-world central banks have bought assets worth over $10trn. At some point that will need to be reversed.

June 2021

The World Bank raised its global growth forecast to 5.6% in 2021. Recovery in China and the US drove the rosier prediction, but unequal access to vaccines will hold back the developing world.

April 2021

The global economy is set to grow by 6 percent in 2021, the IMF said, representing the biggest output surge since the 1970s. Much of this anticipated growth is attributed to big government stimulus packages pumped into developed economies like the US, the EU and Japan in recent months. In the United States, the world's largest economy, many economists estimated that the $1.9 trillion relief package would spur economic expansion by 6.4 percent in 2021, with the US set to join China as the only two economies to achieve GDP growth exceeding pre-pandemic levels.

March 2021

The Organisation for Economic Co-operation and Development (OECD) raised its growth forecast for 2021 to 5.6% (an upgrade of 1.4%), but added there were increasing signs of divergence between countries and sectors. The improvement in the economic outlook reflects the deployment of effective vaccines. The forecast also includes a marked upgrade for the US due to government stimulus plans, which could benefit the country’s trading partners.
China aimed for economic growth of over 6%. Beijing returned to its tradition of setting an annual GDP target after not doing so amid the pandemic in 2020.
Green shoots of recovery started to emerge in Europe:
- The IHS Markit’s preliminary manufacturing purchasing managers index (PMI) for Germany rose to 66.6 in March - the highest since April 1996 - up from 60.7 in February. Services PMI rose to 50.8 in March, up from 45.7 in February.
- The IHS Markit’s preliminary composite purchasing managers index (PMI) for France rose to 49.5 in March, up from 47 in February. Manufacturing PMI rose to 58.8 in March - the highest level since December 2017.

February 2021

Japan's economy shrank 4.8% over the full year 2020, its first contraction since 2009.

January 2021

The global economy still faces the myriad problems it did before 2020, from trade wars to inequality to weak investment. Quartz's field guide provided a preview of what to expect for the global economy in 2021, including the indicators to watch, and potential wildcard events.
COVID vaccine hoarding by rich countries and uneven global access to the jabs could draw out the global recovery from the pandemic. In fact, it could cost the world economy as much as $9.2 trillion, according to a study by the International Chamber of Commerce.
Industries that weren’t directly affected by the health crisis are now experiencing job losses, business failures and declines in spending; more layoffs that were originally classified as temporary are being classified as permanent; and the rate of long-term unemployment - a hallmark of the Great Recession - is on the rise. The implication: a “double-dip” recession is the greatest risk for 2021, according to economist Campbell Harvey. Economist Mohamed El-Erian agrees, deeming the risk of a subsequent recession “high and rising,” based on global data from the manufacturing and services sectors.
China’s GDP expanded by 2.3% in 2020. It was the only major economy to have reported growth, though consumers kept their purse strings tight, with retail sales down 3.9% for the year, reported Quartz.
The Indian economy is estimated to contract 7.7 per cent in 2020-21 compared to 4.2 per cent growth in the previous fiscal year, mainly on account of the impact of the Covid-19 pandemic.

December 2020

The World Bank warned of a “lost decade” economically because of the impact of the pandemic on global trade and investment - as well as on education and its contribution to productivity. The international bank lowered its estimate for potential worldwide growth between 2020 and 2029 to 1.9%, compared with a 2.5% expansion the previous decade.
Slashing its forecast for global growth, the OECD warned that policymakers needed to act to remove “fiscal cliffs” affecting small businesses and low earners amid a resurgence of the coronavirus. While distribution of vaccines would be key to avoiding a worse outcome, the thinktank lowered its 2021 outlook to 4.2% from 5%, and said China would likely supplant the West as the global growth leader at least temporarily.
With the world mired in its worst economic crisis in decades, investment banks this year generated a record $125 billion in fees. The surge came as lenders and underwriters helped companies raise cash to weather the pandemic and its economic effects, noted GZERO Media.
Countries injected about $20 trillion of stimulus into their economies in 2020 - about a quarter of the global GDP - to keep people and businesses afloat.

November 2020

The coronavirus outbreak prompted advanced economies to unveil extraordinary fiscal measures. Though governments are too busy tackling the pandemic to worry about their fiscal deficits, the debt pile-ups will have to eventually be confronted. The EIU's latest quarterly forecast examined what options governments have in tackling this issue and considered the long-term implications a debt problem could have on the global economy.
After almost a decade of negotiations, 15 countries in the Asia Pacific — including China — signed one of the world's largest free trade agreements, the Regional Comprehensive Economic Partnership (RCEP). Experts say that the pact, which covers 2.2 billion people, could help solidify China's role as the world's dominant economic power after the Trump administration pulled out of the rival Trans-Pacific Partnership in 2017.

October 2020

In Good Economics for Hard Times, Nobel Prize-winning economists Abhijit Banerjee and Esther Duflo examined some of the most charged economic issues of the day. Their studies of immigration, trade, job automation and income inequality aimed to dispel some common misunderstandings about those topics that often fuel raucous arguments. On many weighty matters, economists and everyday people disagree. For example, many economists would like to see more immigration, not less, and while the rise of political populism has emboldened voters in e.g. the United States and Europe, the trade shock that already decimated factory towns could be just a warm-up for the more dramatic displacement that automation has in store.
The coronavirus pandemic and the global government responses to contain it, from lockdowns to massive public spending and borrowing, will have huge consequences in the coming years, argued The Economist. Primarily, the crisis will accelerate trends that were already growing: more saving, low interest rates, less globalisation, e-commerce, remote work, along with online education and health care. There will also be more great power conflict, trade disputes and growing wealth disparities.
International Monetary Fund managing director Kristalina Georgieva warned that low- and middle-income countries could send global debt levels above 100% of global GDP in 2021.
In a poll conducted by the Pew Research Centre, a median of 48% of people in 14 countries identified China as the world’s leading economic power, outstripping the US. Among the eight European countries surveyed, more than half considered China to be the world’s most powerful economy,
However, a chart from Howmuch.net, based on World Bank data for Gross Domestic Product (GDP) for 2019, showed that only 16 economies had a GDP higher than $1 trillion, with the US by far the biggest economy at more than $21 trillion - making up just under a quarter of the global total of almost $88 trillion. China was the second largest at more than $14 trillion and Japan was in third place with just over $5 trillion. The top 10 economies combined made up two-thirds of GDP, while the 42 represented on the chart made up just over 90% of the world’s GDP, and the rest of the world accounted for the remaining 9.8%. Africa is the smallest region represented, with three economies - Nigeria, South Africa and Egypt - together making up $1.1 trillion of global GDP.

September 2020

The Economist pointed to another raft of data that underscored the toll that Covid-19 is taking on economies, as more countries reported record-breaking contractions in quarterly GDP.India’s economy was around a quarter smaller in April to June than in the first three months of the year. Australia’s GDP shrank by 7%, Brazil’s by 9.7%, and Turkey’s by 11% - see article.
Australia's economy plunged into its first recession in nearly 30 years, as it suffers the economic fallout from the coronavirus. Gross domestic product (GDP) shrank 7% in the April-to-June quarter compared to the previous three months. This is the biggest fall since records began back in 1959 and came after a fall of 0.3% in the first quarter.

August 2020

The Japanese economy shrank at its fastest rate on record as it battled the coronavirus pandemic. The world’s third largest economy saw its gross domestic product fall 7.8% in April-June 2020 from the previous quarter, or 27.8% on an annualised basis. Japan was already struggling with low economic growth before the crisis.

July 2020

Current forecasts suggest that the coronavirus (COVID-19) global recession will be the deepest since World War II, with the largest fraction of economies experiencing declines in per capita output since 1870. Output of emerging market and developing economies (EMDEs) is expected to contract in 2020 for the first time in at least 60 years.
The US economy contracted by 32.9 percent in the second quarter of the year, the sharpest decline in America's history. The coronavirus pandemic obliterated many US businesses and made unemployment surge above 15 percent, and the economic crisis may get even worse if more states reimpose lockdowns to contain the spread of COVID-19.
China’s economy grew 3.2% in the second quarter. Official statistics showed the country rebounding more than what analysts had forecast, following a contraction last quarter—the first such slump since at least 1992. Its industrial output also expanded for the third straight month, even as retail sales continue to fall. The rebound was better than expected, but investors are concerned that it was mainly a result of heavy public spending on infrastructure.
South Korea’s economy plunged by the most in decades. The country slipped into a recession after its GDP slumped 2.9% year-on-year, alongside an on-quarter drop of 16.6% in exports - the worst performance since 1963.
Australia unveiled its largest deficit since World War II.

June 2020

A forecast from the World Bank predicted the global economy would contract in 2020 by 5.2% and the declines will be more widespread than at any time in the last 150 years. The World Bank’s president, David Malpass, said the coronavirus pandemic was jeopardising decades of progress in the developing world. He said many developing countries were fighting on two fronts - the domestic outbreak of the disease and the economic spill-over from deep recessions in rich nations. The Bank says developing economies as a group will decline this year, the first time that has happened in at least six decades. The report also says incomes per person will fall in a larger proportion of countries than at any time since 1870. The downturn, the Bank warns, will tip millions of people into extreme poverty.
The International Monetary Fund (IMF) further downgraded its forecasts for the global economy for 2020 and 2021. The IMF now says economic activity in 2020 is likely to decline by almost 5% – nearly two percentage points more than what it predicted in April. It says this is likely to increase so-called "economic scars" as companies close and people lose their jobs. The international organisation expects the efficiency of businesses that do survive to be undermined by steps to enhance workplace safety and hygiene.
The pandemic's impact on growth will be biggest in Europe, according to the OECD, a group of advanced countries. Spain, France, Italy and the UK will suffer most, with GDP in each contracting by at least 14 percent from the previous year. That's a collapse nearly twice as big as the projection for the global economy, which is set to shrink by 7.6 percent this year.

May 2020

Just about the entire planet grappled with what may well be the biggest disruption in trade and commerce since the Great Depression. Policymakers fought back with trillions of dollars of spending and lending. The result was the largest experiment in economic policy outside of a world war.
Even before the pandemic, globalisation was in trouble. The open system of trade that had dominated the world economy for decades had been damaged by the financial crash and the Sino-American trade war. Now it is reeling from its third body-blow in a dozen years as lockdowns have sealed borders and disrupted commerce (see Briefing). The number of passengers at Heathrow has dropped by 97% year-on-year; Mexican car exports fell by 90% in April; 21% of transpacific container-sailings in May have been cancelled.
The Federal Reserve’s Nowcast, a statistical model based on economic indicators, forecasts a 31% contraction in US GDP, while economists at JPMorgan estimate the economy could shrink as much as 40%.
Japan slid into a recession. The economy shrank 3.4% from the previous quarter, marking a significant contraction for the second consecutive quarter.
France's economy is set to shrink by roughly 20% in the second quarter as a result of the country's tough lockdown measures, the statistics office Insee said. It contracted by nearly 6% in the first quarter, according to Insee. Economic activity was functioning at 21% below usual levels after the easing of the lockdown, which was in place from mid-March to early May, it added. But consumer spending improved to 6% below normal levels after shops were allowed to reopen after nearly two months. Earlier in May it was 33% below normal levels. If activity were to rebound to pre-crisis levels by July, Insee said that France's economy could contract 8% for the whole of 2020.
Spain, which draws about 15 percent of its total GDP from tourism, stands to lose as much as 92 billion euros in revenue in 2020 as a result of travel bans.
Singapore slashed its 2020 economic outlook again. The economy is predicted to contract between 4% to 7% this year, deeper than the 1% to 4% forecast earlier, setting the country on track for its worst recession since its independence in 1965.

April 2020

With the Asian Development Bank estimating that the COVID-19 outbreak’s global cost could reach $4.1 trillion and the OECD warning that the shock caused by the pandemic is already greater than the financial crisis of 2007, the global economic impact of the health emergency is not only vast but also unpredictable. The disruption to a number of industries and sectors including, but not limited to, the airline and energy industries, could result in long-term damage to global trade flows, supply and demand.
The International Monetary Fund released a grim new global outlook that minced no words: "The Great Lockdown" has pushed the world into the biggest economic disaster since the Great Depression of the 1930s. The numbers are staggering. The global economy will contract thirty times more than it did during the 2009-2010 recession. Among major economies, only China and India will grow this year, and just barely.
The International Monetary Fund has said that the coronavirus pandemic will cause the world's worst economic catastrophe since the Great Depression in the 1930s. It will vastly surpass what happened in 2009 during the recession. If there's a silver lining, it's that the recovery from what the Fund calls "The Great Lockdown" is set to be much faster than what we saw in 2010.
The US economy sank at an annual rate of 4.8% during the first quarter, according to official figures. It is the most severe contraction in more than a decade. More than 26 million people in the US have filed for unemployment.

March 2020

The OECD cut its global growth forecast to 2.4% for 2020 and warned that a "longer lasting and more intensive coronavirus outbreak" could slash growth nearly in half, to an annual rate of 1.5 percent. Either way, it would be the world's worst growth rate since the global financial crisis of 2008-2009.
In China, industrial production for the combined months of January and February fell 13.5% from a year earlier, while retail sales plunged 20.5%, far worse than what economists had predicted.

February 2020

The American public's view of the economy is as positive as it's been in twenty years, with 57 percent of Americans surveyed agreeing that the nation's economy is in "excellent" or "good" shape, according to a Pew poll. But people's viewpoints are sharply partisan: only 39 percent of Democrats agree that the economy is doing well.

January 2020

China’s quarantine measures are terrible for the global economy, warned Quartz, adding that travel bans and shuttered businesses will have a much greater impact than the 2003 SARS outbreak.
The Economist believes that global trade tensions were in part to blame for Germany’s economy expanding by just 0.6% last year, the slowest pace since 2013 and below the 1.5% it chalked up in 2018. The export industry remains subdued.
China’s economic growth hit a multi-decade low. GDP last year came in at 6.1%, the lowest level in 29 years and down from the 6.6% recorded in 2018, due in part to the trade war with the US. More stimulus is expected.

December 2019

During the 2010s, China and the United States increased their share of global GDP. In 2010, China accounted for 9 percent of global output, rising to 15 percent by 2018. The US went from 22 percent to 23 percent over the same time frame.

November 2019

The global slowdown that began in early 2018 is nearing an end, according to Goldman Sachs Research economists, who forecast 3.4% global GDP growth in 2020. The modest increase from 2019’s expected growth of 3.1% will be driven by easier financial conditions, a US-China trade détente, and reduced Brexit uncertainty.
The world's economy is set to grow at its slowest pace since the global financial crisis a decade ago, according to the OECD. The gloomy forecast notes that governments aren't doing enough to deal with big structural changes like US-China trade tensions, climate change, or the digital revolution. The last time the global economy nose-dived, countries were able to muster enough collaboration to coordinate a global response. But given the profound dysfunction of the international order these days, it's hard to imagine countries doing the same again if things take a turn for the worse, warned GZEROMedia.

October 2019

Global economic growth this year will slow to its weakest level since the 2008 global financial crisis, the International Monetary Fund predicted. The US-China trade war is a big reason why: the tariff spat between the world's two largest economies could knock 0.8% off global GDP by 2020.
The Chinese economy has slowed down. After bringing close to a billion people out of poverty since 1979, an economy that became the 20th century's "workshop to the world" is now expanding at its slowest pace in thirty years. That's not quite as bad as it sounds – but it's a looming challenge for a system where part of the deal with the population is: little political freedom, lots of growth.

August 2019

Executives’ sentiments on the global economy are the lowest in years, amid growing concerns over trade conflicts. Meanwhile, their expectations about conditions at home remain more negative than positive.

July 2019

The International Monetary Fund cut its forecast for economic growth in the world's emerging markets this year to 4.1 percent – the weakest rate in a decade. Iran, Russia, and South Africa were among the global political hotspots expected to suffer from shrinking economies this year.
China’s economic growth slowed to 6.2% in the second quarter, its weakest pace in at least 27 years, as demand at home and abroad faltered in the face of mounting U.S. trade pressure.
It's been 121 months since the US emerged from the steep recession that followed the financial crisis in June 2009. That's the longest economic expansion in US history.

June 2019

The World Bank added its voice to those warning of a worsening outlook for the global economy this year, amid signs that some major economies could experience a recession. While the risk of a full-blown international recession next year with parallels to the 2008 financial crisis remain remote, the International Monetary Fund has warned that the storm clouds are gathering for the world economy
According to the IMF, six of the world's ten fastest-growing economies this year will be in Africa: Senegal, Ivory Coast, Ethiopia, Rwanda, South Sudan and Ghana.

May 2019

The ‘circular economy’ (CE) concept is fast becoming a new model for resilient growth. A circular economy is one in which products and materials are recycled, repaired and reused rather than thrown away, and in which waste from one industrial process becomes a valued input into another. Creating and optimising resource ‘loops’ along value chains could help meet the material needs of growing populations through drastically lower rates of per capita primary resource use. The CE is now a core component both of the EU’s 2050 Long-Term Strategy to achieve a climate-neutral Europe and of China’s five-year plans. Japan has tabled the CE as a priority for the 2019 G20 summit.
For decades, economists have tried to come up with better methods of measuring the economy than gross domestic product. But the dominance of GDP - a single figure, universally understood, and widely used for almost a century - has endured. This is despite its shortcomings gauging wellbeing and other factors that are important to a nation’s economic health.

April 2019

The Financial Times warned that middle classes in developed nations are under pressure from stagnant income growth, rising lifestyle costs and unstable jobs, and this risks fuelling political instability. The OECD club of 36 rich nations said middle-income workers had seen their standard of living stagnate over the past decade, while higher-income households had continued to accumulate income and wealth.

March 2019

China cut its GDP target. Premier Li Keqiang lowered the country’s growth target during the annual National People’s Congress meetings, setting it at 6% to 6.5%. He also announced a major tax cut aimed at boosting the manufacturing sector.
Indeed, a new paper found that China’s statistics on industrial output and investment were consistently embellished by an average of two percentage points every year from 2008 to 2016. This would have exaggerated the size of the economy by 16%, or more than $1.5trn, in 2016. But though China’s economy may be smaller than previously thought, it could be more resilient, noted The Economist.
Germany's economy just about avoided falling into recession during the final three months of last year. Europe's largest economy registered zero growth during the fourth quarter of 2018, the country's Federal Statistics Office said. China’s industrial output growth then slumped to its lowest in a decade. The world’s second-largest economy slowed further, with industrial production growth falling to 5.3% in January and February, below the 5.6% estimate by economists, while unemployment edged up to 5.3% from 4.9% in December.
Italy was due to become the first G7 country to formally endorse China's Belt and Road global investment plan. Italian officials hope to draw Chinese investment into Italy's aging infrastructure and open Chinese markets to more Italian-made products. EU and American officials fear that Chinese investment will leave Italy dangerously deep in debt. (Italy is already the second most indebted country in Europe, after Greece.) They also worry that Italy's endorsement for Belt and Road will undermine their ability to present a united front when bargaining with China over trade and investment practices, noted GZEROMedia.
Australia’s economy slowed more than expected. GDP in the fourth quarter of 2018 rose 0.2%, below economists’ forecast of 0.3%, and the Australian dollar fell to a three-month low.
Sovereign wealth funds’ quiet march on the world economy continues, acording to Quartz. Despite little media attention, these secretive state-run institutions have quadrupled in size since 2005 and now command cash equal to 10% of global GDP. Today they’re buying up not just stocks and bonds, but also direct stakes in the world’s most promising companies.

February 2019

The EU-Japan Economic Partnership Agreement begun. Although it’s not clear how the deal will look after Brexit, regulations for more than $200 billion in trade goods will see significant changes as Japan and the EU enter their free-trade pact.
A gauge of China’s factory activity fell to its lowest level in three years. The manufacturing purchasing managers’ index showed new export orders again declining and that manufacturers cut jobs more aggressively. Japan’s factory production also declined due to weak demand from China.
Russia’s economy grew 2.3 percent in 2018, according to an estimate issued by Russian statistics agency Rosstat. The official figure, which comes as President Vladimir Putin’s popularity has been falling, was 0.6 percentage points higher than the projection of the International Monetary Fund.
Further reading:

January 2019

China’s economy grew at its slowest pace since 1990. Amid a trade fight with the US, the world’s second-largest economy grew 6.6% in 2018, with fourth-quarter growth slowing to 6.4% from a year earlier, matching levels last seen in early 2009 during the global financial crisis.
Germany's economy grew by 1.5% in 2018 its slowest rate since 2013, the latest official figures show. Figures from the Federal Statistics Office showed Europe's largest economy slowed sharply as the year wore on. A weaker global economy and problems in the car industry, caused by new pollution standards, have been cited as contributing to the slowdown.
Italy’s economy slipped into recession last year. In the final quarter of 2018, the economy shrank by 0.2%, its second consecutive contraction. The causes are partly external: global trade has slowed and Germany’s industrial production, which has knock-on effects in Italy, has declined. But domestic politics have worsened things. The budget of Italy’s populist government has caused instability. The combination of these forces seem likely to depress the economy even further this year, warned the Economist.
Greece raised its monthly minimum wage. The 11% increase to €650 ($740) is the nation’s first wage adjustment in more than 10 years, though workers and employers say the effort won’t offset the losses from Greece’s prolonged recession.
The euro, now 20 years old, has been an economic fiasco, according to The Economist. GDP growth in the euro area has lagged behind that in the EU as a whole throughout its life. A new slump is looming. Eurozone economies suffer from weak domestic demand, owing largely to draconian measures to limit government borrowing. To avoid collapse, Europe needs to loosen its fiscal restraints and implement a stimulus package, added The Economist.
Further reading:

December 2018

The economics profession is vulnerable to groupthink. It suffers from a stark absence of diversity that results in missing crucial information, warned Quartz.
Quartz also believes that, 10 years after the financial crisis, the foundations of economics are now changing. Students educated in the shadow of the crisis are demanding new lessons, and a more diverse education that tackles the issues most people are grappling with today, such as economic anxiety, inequality, sustainability, and climate change.
40 years ago, China’s share of global GDP was 2%; now it is more than 18%. The debate about its growth is sometimes divided between those who credit the government and those who credit the market. Both government policies and market forces have clearly been important, argued The Economist, and the real issue is how they have interacted. China is already the world’s largest manufacturer and biggest exporter. In other words, if it’s not already the world’s dominant economic power, China soon will be.
America’s economy added 155,000 net new jobs in November and its unemployment rate, at 3.7%, is at its lowest in roughly half a century. A broadening of global growth and a fiscal stimulus provided by President Donald Trump’s tax cut spurred the economy, but the main credit should go to the Federal Reserve. Its decision to raise interest rates and rein in growth gradually has kept inflation low even as unemployment has fallen, claimed The Economist.
Vladimir Putin decreed that Russia become one of the world’s five largest economies by 2024. To achieve this, Russia’s GDP would have to grow by an average 4.4 percent per year between now and then. The World Bank estimates that Russia will average 1-1.5 percent GDP growth over this period.
The commentariat is divided on whether there is such a thing as a "good" recession, with some believing that no longer will we be judged primarily by what we earn, and that this "will refashion us for the better", or that "as times get worse, we get better". At the same time, others argue the opposite - i.e. that recessions "do not make people finer, more spiritual human beings. They destroy lives" and that "affluenza trumps penury" every time. So who's right? Time will tell. For now, this feels like a classic relativist stand-off.

November 2018

Capitalism has a real problem, argued The Economist - just not the one that protectionists and populists like to talk about. Life has become far too comfortable for some firms in the old economy, and in the new economy, tech giants have amassed formidable market power. A revolution is needed to unleash competition, force down abnormally high profits and ensure that innovation can thrive. A competition revolution could also help restore the public’s faith in capitalism, added the newspaper.
The RSA argued that the circular economy is seen as one route to sustainable development and the improvement of livelihoods in the Global South: an economy where every element of every product is reused is an especially appealing concept as we respond to the IPCC's recent urgent warning on climate change.
China responded to the global financial crisis with a massive stimulus package. Growth rebounded, even as it sputtered in other countries. Before the crisis China had a 6% share of global GDP; today that is closer to 16%. Yet there was a big downside: the economy became much more reliant on debt. Now, on the tenth anniversary of its big stimulus, China is once again confronted by flagging growth. But it cannot afford another binge, argued The Economist.
Japan’s economy contracted in the third quarter, with GDP falling at an annualised rate of 1.2%. The contraction had been widely expected after severe flooding hit the west of the country in July and an earthquake affected the north in September.
German GDP also fell in the third quarter, its first contraction since 2015. That was partly driven by new emissions-testing regulations, which slammed the brakes on car production during the summer. Exports also took a tumble, thanks to a souring global trade environment.
The Bank of Japan put in place a controversial negative interest-rate policy in 2016 to help the country reach 2% inflation, but the goal is proving elusive. Core inflation, subtracting fresh food, was 1% in October, the same as September.
Further reading:
- Global slowdown begins to look more troublesome - FT
- The gig economy hits the white-collar worker - FT

October 2018

The IMF lowered its growth forecast for the world. The organisation revised its estimate for global GDP growth this year from 3.9% to 3.7%, warning of trade barriers, lower capital flows to emerging markets, and political risks.
Indeed, stock markets don’t always correlate well with what’s going on in the economy, but a largely lacklustre showing this year may well be sending out warning pulses, warned Prospect. For the economic and financial community, which had already been speculating that the next recession might be due in 2020, the abiding sense from the IMF is that there are plenty of reasons to worry.
The latest Global Economic Conditions Survey the Association of Chartered Certified Accountants Institute of Management Accountants) revealed confidence fell in the third quarter of 2018, to its lowest since the beginning of 2016. News flow about trade tensions has greatly impacted on confidence within the world’s biggest economies - the US and China. While confidence fell by 20 points, it held up best in South Asia and Western Europe with falls of 2 and 6 points respectively. But in both key regions of North America and Asia Pacific confidence fell by over 20 points; in Asia Pacific confidence is at its lowest since the start of 2016, in North America it is the lowest since the start of 2017. Confidence in the Middle East and Africa also fell sharply by 35 and 22 points respectively.
The Economist looked at the growing rivalry between China and America. For the past 25 years America has believed that economic integration would make China not just wealthier but also more liberal, pluralistic and democratic. Today, however, America has come to see China as a strategic rival—a malevolent actor and a rule-breaker.
China published its third-quarter GDP figures. Growth for the quarter came in at 6.5% year-on-year, slightly below analysts’ expectations and the slowest pace since 2009, suggesting that trade tensions and a slowing economy at home are starting to bite.
Europe’s economy is still seen by many as both stagnant and crisis-prone yet, for Chatham House at least, it is proving resilient with new signs of growth.
Bruegel welcomed a Financial Times commentator to explore the journey taken by the field of economics since the financial crisis struck 10 years ago, and discuss what new tools economics has now that it didn’t have then - read report.
Economists hoped for a pick-up in the eurozone economy for the second half of the year, but with uncertainty around Brexit and trade tensions, that hasn’t materialised.
There are high levels of consumer and business confidence in the US and unemployment rates are at a 50-year low, leading to both surging investment and the US being on pace to top three percent GDP growth for the first time in over a decade. However, many wonder if it can last, saying that fiscal stimulus in the form of tax cuts is simply a ‘sugar high’, noted Chatham House, asking what are the main economic goals of the current administration.

September 2018

Great strides have been made since 2008 to prevent a recurrence of the financial crisis and recession that followed. Yet there is more debt than ever in the global financial system, warned McKinsey in an analysis of the global financial system 1o years after the crisis that left the world reeling - detailing the state of the world economy and analysing the potential for such a crisis to repeat itself.
Gains from AI could add $13 trillion to global economic output by 2030, around 16 percent higher cumulative GDP compared to today, according to McKinsey, but those benefits may be spread unevenly, and the economic impact of AI could exacerbate divides between workers, companies, and governments.
US unilateralism could lead to a “real dollar crisis” within 10 years and the rise of alternative currencies, BlackRock's CEO told Bloomberg Forum, while the EU’s top diplomat described an EU-China-Russia plan to skirt US sanctions on Iran as the dollars’s first real challenge.
10 years after the collapse of Lehman Brothers, The Economist asked whether the world has learned the lessons of the financial crisis. Its conclusion: the good news is that banks are more resilient and better regulated. However, finance still has much to fix. Housing loans are mismanaged, the euro remains inherently unstable, offshore dollar finance has ballooned. Meanwhile, fracturing geopolitics only makes a hyper-globalised industry like finance harder to deal with.
In the decade before the financial crisis, inflation-adjusted wages grew by an average of 27% in the OECD. In the 10 years since, real wages have increased by just 8.4%, on average. Britain has done particularly badly: at 4%, its unemployment rate is its lowest since 1975, which means that wages should rise. Instead, they have fallen. Low jobless rates in America and Germany have also failed to raise wages much, according to The Economist.
Indeed, stagnation (or even decline) in the living standards of ordinary working families, explored in a recent RSA report Addressing Economic Insecurity is a recurring political theme. Household budgets are squeezed and indebtedness is growing for may families.
Further reading:
- The economic cost of fraying trust in Europe - FT
- Uncertain economic and geopolitical futures - Shaping Tomorrow

August 2018

60 private-sector economists were recently surveyed by the Wall Street Journal, and their prediction is somewhat dire, noted Big Think. 59% of them say the economic expansion that began in 2009 after the Great Recession of 2008 took the wind out of the world’s economic sails will end in 2020. Another 22% pegged the year 2021.
BRICS countries, particularly China and India, will continue to play a strong role in shaping the direction of the global economy, found EY. While GDP growth in China accelerated to 6.9% in 2017, it is projected to weaken slightly to 6.6% in 2018 owing to the lagged effect of financial regulatory tightening and softening of external demand. The IMF recently noted that a wide range of regulatory reforms reduced financial sector risks in China. For India, the IMF expects a growth rate of 7.3% in 2018 and 7.5% in 2019, making it the fastest-growing country among major economies.
Meanwhile, China’s economy showed more signs of slowing. Fixed-asset investment growth fell well short of expectations for the January-July period, as weakening domestic demand and faltering business confidence took their toll. Retail sales also missed expectations, rising 8.8% in July from a year earlier, below an expected 9.1%
GZEROMedia pointed to growing economic anxiety in China, where the economy has been slowing for years, in part by design, as the leadership shifts from heavy reliance on exports to a model fuelled by the spending of Chinese consumers. It hasn’t been a smooth process, and the state has recently had to inject more than $100 billion to keep the economy moving at a healthy pace.
Stock buybacks are ruining economies, warned Quartz, claiming that the transfer of trillions of dollars to shareholders increases inequality and reduces corporate investment.
Greece formally exited its third bailout programme, after receiving more than €300 billion ($342 billion) over eight years from European lenders. Prime minister Alexis Tsipras described the final bailout loan as the “last act in the drama” and proclaimed a “new page” of growth—even though the country still faces severe challenges.
Further reading:

July 2018

Discussing the gap in understanding between economics and the humanities, John Lanchester, who has written compellingly about money in both fiction and non-fiction, worried in The New Yorker that the realist novel is a solemn enemy of equations. Indeed, he believes that the project of reducing behaviour to laws and the project of attending to human beings in all their complexity and specifics are diametrically opposed.
A debate about economics kicked off after an article in Prospect’s May 2018 issue that we need to “rip it up and start again.” Fierce resistance has come from academics who insist that such critics ignore what economists really do. A new Prospect article claimed that the concern lies not with what economists do - many do excellent and innovative research - but with what economists teach, especially in introductory courses. Most people who study economics only study a little before becoming politicians, journalists, civil servants, executives, lawyers and community leaders. That makes the most basic course - Economics 101- the most influential one. It frames the economic narrative in boardrooms, in editorial meetings, in parliamentary debates, and in public discourse.
North America and Africa lead the way in economic confidence in 2018 Q2 while the UK languished, found the latest ACCA and IMA economic survey.
The Chinese economy grew 6.7% in the second quarter from a year earlier, cooling slightly from the first quarter. Meanwhile last month's industrial output missed forecasts, matching the slowest growth rate in over two years.
Quartz warned that, in an increasingly digital world with growing concerns about sustainability, dismay is mounting about the use of GDP as the benchmark measure for a nation’s economy. It fails to take into account other things that could be more valuable indicators about how a country is doing, such as inequality, well-being, happiness, clean air, and climate-change mitigation.
New World Investment Report analysis found that global flows of foreign direct investment fell by 23 per cent in 2017. Cross-border investment in developed and transition economies dropped sharply, while growth was near zero in developing economies. With only a very modest recovery predicted for 2018, this negative trend is a long-term concern for policymakers worldwide, especially for developing countries, where international investment is indispensable for sustainable industrial development.
The Atlanta Fed projected the US economy to grow at an annualised rate of 4.8 percent in the second quarter of the year. For the first time in more than 20 years, there are more job openings in the US than people looking for jobs, found GZEROMedia.
Ethiopia’s economy is forecast to grow 8.5 percent this year. That's one of the fastest rates for any country in the world, and it's providing recently-appointed Prime Minister Abiy Ahmed the political cover to pursue difficult reforms, according to GZEROMedia.
South Korea’s central bank reported on North Korea’s economy, said Quartz.The Bank of Korea estimated that the troublesome neighbour’s economy declined at the sharpest rate in 20 years in 2017, contracting 3.5% from the previous year, in a sign that international sanctions over Kim Jong Un’s weapons programs have slowed growth.
The Iranian economy is expected to grow 1.8 percent this year, down from a projected 4.3 percent before President Trump’s decision to exit the nuclear deal, according to BMI research. Next year it’s forecast to contract by 4.3 percent.
According to the International Monetary Fund, inflation in Venezuela could reach 1,000,000% by the end of the year - a figure drawing comparisons to Germany after WWI and Zimbabwe at the beginning of the last decade. If the prediction comes true, Venezuela’s economy will have shrunk 50% over the last five years.
Further reading:

June 2018

The field of economics lags considerably behind other social sciences, such as history, anthropology and sociology, in understanding the ways narratives affect human thoughts and actions, claimed getabstract. Economist Robert J. Shiller explains the large-scale ramifications and detailed nuances of “narrative economics,” and how stories about an economic event – perhaps tales of the Great Depression or accounts of asset bubbles – may contribute to financial disruption.
The gig economy is growing, fast, with nearly 7 million people projected to be working in it in the US by the end of this year, up 26% from 2017. That’s according to estimates from Intuit that were cited in the latest Internet Trends report.
Emerging markets were the darlings of financial markets in 2017, but this year is proving more challenging, warned the EIU. Strong growth and rising interest rates in the US are making it harder to attract funds, while the strengthening US dollar is raising the cost of existing dollar-denominated debt. At the same time, a range of threats – from US-led trade protectionism, to geopolitical upheaval in the middle East, to rising oil prices—have emerged, complicating many emerging economies' previously bright growth prospects.
Further reading:

May 2018

International investment in the emerging economies can help develop and maintain internal capital markets, but domestic stakeholders cannot rely solely on outsiders to support this critical financial function. So said How Global Can Power Local, a white paper from the World Economic Forum. It presents some best practices on building vibrant capital markets and wooing foreign funds.
Growth in the world economy is surpassing expectations and global GDP is now expected to expand by more than three per cent this year and in 2019, reflecting strong growth in developed countries and broadly favourable investment conditions, according to the United Nations World Economic Situation and Prospects as of mid-2018.
The global financial crisis prompted the field of macroeconomics to rethink its methods. Bruegel addressed the changes made and the problems still unresolved.
According to Russian thinktank Valdai Group, the BRICS nations are re-energising regional integration and expanding global alliances. China is leading a transformation of the BRICS infrastructure beyond the original group into the “BRICS+ circle.” Multioption trade and investment arrangements would include 35 countries across several continents. The initiative could expand further to include developed nations, forming a “BRICS++” that would encompass a “circle of friends”.
According to the International Monetary Fund (IMF), we are on course to enjoy the strongest year of global growth since 2011, with the world economy predicted to expand by 3.9%. What’s more, this growth is evenly dispersed – since every major economy in the world is growing.
EY’s Geostrategic Business Group, in partnership with Zurich Insurance and the Atlantic Council, launched a report which explores how geopolitics is impacting the business environment in the United States. Borders vs. Barriers seeks to guide businesses as they approach the difficult task of integrating geopolitical uncertainty into their business planning and is based on a survey of 500 CFOs in 30 countries, economic modelling and scenario analysis.
Argentina defends peso as emerging markets stumble - FT
EU plans €30bn fund to help crisis-hit eurozone countries - FT
Japan GDP: economy contracted for the first time in nine quarters
KPMG: Asean CEOs cautiously optimistic about growth in the face of headwinds – BorneoPost Online
Soft China April investment, retail sales suggest economy losing steam | Reuters
This chart shows what $63 trillion of world debt looks like | World Economic Forum

April 2018

More than 25 percent of emerging and developing market economies are expected to grow at a slower pace in per capita terms than their rich-world counterparts over the next five years, leaving them only further behind in terms of living standards, according to the IMF.
The latest IMF World Economic Outlook report predicts global growth reaching 3.9% in 2018 and 2019, up from 3.8% in 2017. The IMF noted that the world economy has gained momentum since last year driven by investment-led recovery, higher cross-border trade flows and a rebound in commodity prices.
Prospect asked whether it is time for a revolution in economics. The tentacles of the “neoclassical” model reach far and wide, including into our universities and public policy but one view is that this model gets it all wrong - what’s needed is a “decontamination” and return to first principles. One response to this view is that economics is not in thrall to the neoclassical model, while others imagine what advice the great economic thinkers would give their profession today.
Capitalism lifted 1 billion people out of poverty in 20 years but still many believe the neo-liberal capitalist model needs shaking up, and that regulators, supervisors and corporate governance managers have failed those they are meant to protect. The World Economic Forum has debated the key question: what is the alternative?
Africa has a new free trade area. This is what you need to know | World Economic Forum
Cause for Concern: 10 risks for the global economy - Economist Intelligence Unit
China first-quarter GDP grows 6.8% on private investment rebound - FT
China hits U.S. goods with tariffs as 'sparks' of trade war fly
China's trade surplus with U.S. soars in first quarter but March exports falter
Christine Lagarde: 3 priorities for the global economy | World Economic Forum
Emerging market current account surplus falls to 20-year low - FT
Emerging market growth ‘losing momentum’ - FT
Global economic confidence rebounds to highest level since 2009
Good times are still to come for fast-growing India - FT
How free trade could unlock Africa’s potential - FT
Job loss fears from automation overblown, says OECD - FT
Morocco is the new investment capital of Africa, according to a new index — Quartz
The eurozone economy: a nasty surprise in store? - FT
The Future of Economics - Stanford Graduate School of Business
The mystery of the eurozone slowdown - FT
These are the 8 reasons why 2018 could be Africa's year | World Economic Forum
Trump Plans Stiff Trade Tariffs and Other Penalties on China - The New York Times
Who creates a nation’s economic value? - FT

March 2018

February 2018

January 2018

December 2017

November 2017

October 2017

September 2017

August 2017

July 2017

October 2016

September 2016

August 2016

July 2016

June 2016

PwC's Economics team launched its monthly Global Economy Watch for June. This month, PwC economists indicate that productivity growth in Ireland and Spain – the top performing peripheraleconomies in the Eurozone – has outstripped that in Germany, France and the Netherlands. But sectoral fortunes have been mixed, with PwC analysis showing that in several Eurozone economies, productivity in the manufacturing sector has grown at a relatively rapid rate. Meanwhile, figures reveal that the eurozone economy grew faster than the US in the first quarter of 2016. But PwC analysis shows that the economic - and to a greater extent, the labour market - recovery has been uneven. For example, the range of unemployment rates in the eurozone at this stage of the recovery is the highest it has ever been compared to past recoveries.

The World Bank then concurred: global growth will fall to just 2.4% this year, as the world economy is dragged down by weak advancing economies, persistently low commodity prices and subdued global trade, according to its latest health check on the global economy. The bank delivered a substantial downgrade to global GDP, from an earlier forecast of 2.9% made in January, and warned of the threat of rising private debt levels in the emerging world.

The United Nations cut its global growth forecast for 2016 to 2.4% from its forecast 2.9% in December; however it is attributed largely to the downward revisions for Africa. Global growth is projected to rise marginally to 2.8% in 2017, remaining below pre-crisis trends. The protracted period of slow productivity growth and weak investment weigh on the longer-term potential of the global economy.

In its latest twice yearly global assessment, the OECD warned that the world economy is “stuck in a low-growth trap”. The organisation said monetary policy alone could no longer be relied on to deliver growth and governments should be using the fiscal tools at their disposal, such as increases in investment spending, to stimulate demand. It also pointed to several downside risks to global growth, the most immediate of which would be if Britain votes to leave the European Union in a referendum on June 23rd.