What can we learn from past pandemics?

The macroeconomic consequences of the Covid-19 pandemic are likely to be very different from those of previous pandemics, largely because of the unprecedented response by governments and central banks. The most important lesson from history is that seismic shocks tend to accelerate changes to economic structures, institutions and behaviours that were already underway. This implies that the current pandemic could leave a legacy that touches on everything from globalisation to the future of work.
Gabriella Dickens Global Economist
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Global Economics Chart Book

Recoveries regaining pace after slow start to the year

Global GDP growth slowed sharply in Q1 as most parts of the world grappled with renewed waves of coronavirus. The US and Korea were among the few exceptions where recoveries accelerated. But with global infection numbers now falling, activity seems to be gaining momentum again. The Global Composite PMI rose to its highest level since April 2006 in May. What’s more, our high frequency COVID Mobility Trackers suggest that activity has risen sharply, particularly in Europe, as restrictions have eased. Other than in particular sectors such as motor vehicle production, there is little evidence so far that recent supply shortages are holding back output. But there are growing signs of inflationary pressure around the world, most notably in the US. Fears of higher inflation should prompt numerous central banks in emerging economies – especially in Central & Eastern Europe – to shift towards tighter monetary policy in the coming quarters. But central banks in major DMs will look through higher inflation this year and next.

11 June 2021

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How concerning is the recent rise in inflation?

A rise in inflation was always likely to happen this year as economies re-opened and energy prices recovered from last year’s sharp falls. But in the US in particular, the increase since the start of the year has exceeded even our relatively strong expectations. While this might primarily reflect transitory factors, we continue to think that the risk of a sustained rise in inflation is bigger in the US than in other developed economies.

10 June 2021

Global Economics Update

G7 tax deal encouraging sign for cooperation among DMs

The direct implications of this weekend’s deal on global corporate taxation struck by G7 finance ministers will be limited. But the deal suggests that wealthy nations have found renewed determination under a Biden presidency to cooperate on global issues, which may pay dividends in other areas in years to come.

7 June 2021

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PMIs imply that goods shortages are pushing up prices

The global manufacturing PMI held broadly steady in May as a sharp drop in India’s survey was offset by rises in other major economies whose recoveries appear to be continuing unabated. Meanwhile, goods shortages are exerting upward pressure on prices, and there are some signs that they are also weighing on output, particularly in the euro-zone.

1 June 2021

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Higher costs and delays are not damaging demand

The further rise in real trade in March suggests that external demand continued to recover, even as capacity constraints related to shipping were intensifying. And while shipping costs have risen and delays worsened in the weeks since these data were recorded, so far at least, there is little evidence that these factors are weighing on external demand.

26 May 2021

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PMIs: supply is struggling to keep up with demand

The flash PMIs for May suggest that the recovery is well underway in those economies that are now on top of the virus. However, supply is still struggling to keep up with surging demand. And as well as exerting upward pressure on prices, there are some tentative signs that supply shortages are starting to weigh on manufacturing output, particularly in the US and the euro-zone.

21 May 2021
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