Globalisation and its effects on the world economy

We estimate that the current wave of globalisation is responsible for around a third of the pick-up in global per capita income growth since 1990. Almost all of that reflects an improvement in productivity growth in emerging economies. For advanced economies, globalisation has had a marked impact on the distribution of income, but the effect on aggregate growth has been small. That suggests emerging markets would be at far greater risk if globalisation were to go into reverse.
Michael Pearce Senior US Economist
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More from Emerging Markets

Emerging Markets Economics Chart Book

Inflation concerns build

Inflation has risen sharply across the emerging world in the last few months, prompting much more cautious words from central banks (mainly in Latin America and Emerging Europe), but we expect that EM price pressures will ease in the coming months. The recent spike in energy inflation should unwind soon, while supply constraints that are pushing up inflation for some goods won’t last indefinitely. With demand some way below most EMs’ supply potential, underlying inflation rates should fall back. We’re more concerned about inflation dynamics in Central Europe though, and central banks in Czechia and Hungary could shortly join Russia and Brazil in being among the first to hike rates.

18 June 2021

Emerging Markets Economics Update

China is about to flood EMs with vaccines

By September, China could be in a position to export 340mn vaccines doses each month – more than most regions of the world have administered in total so far. China’s vaccines are less effective than others, but have been found to suppress outbreaks where they have been used if a high enough share of a population is vaccinated. Large-scale exports from China could therefore give a significant boost to the prospects of many EMs now struggling to vaccinate because of a lack of vaccine supply.

17 June 2021

Emerging Markets Economics Update

EM policy tightening will proceed only gradually

The broad-based rise in inflation across EMs this year has elicited varying degrees of policy responses from central banks. Those facing above-target inflation and most worried about credibility (Brazil, Russia) have already started hiking rates and will continue to do so. Other EMs where recoveries are progressing well could follow suit soon (Czech Republic, Hungary and Chile). But for many, protracted and bumpier recoveries mean that central banks will delay policy normalisation for a while longer.

16 June 2021

More from Michael Pearce

US Data Response

ISM Manufacturing Index (May)

While the headline ISM manufacturing index edged up to 61.2 in May, from 60.7, the main takeaway from the release was that shortages of workers, and not just raw materials, now appear to be playing a key role in holding back production and pushing up prices.

1 June 2021

US Economics Weekly

Fed remaining dovish as supply-side constraints mount

In a relatively quiet week, the few data releases we did get added to signs that shortages are pushing up prices further and restraining the pace of economic recovery.

21 May 2021

US Economics Update

How big a risk is the slowdown in vaccinations?

The sharp drop in demand for vaccines in recent weeks is a risk to our assumption that the rollout reaches critical mass over the coming months. That could mean infections and hospitalisations remain elevated, but we doubt that would be a big drag on the economic recovery.

4 May 2021
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