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.
Simon MacAdam Senior Global Economist
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Global Economics Focus

Will labour shortages spur productivity gains?

One possible upside of the current labour market shortages in developed economies is that they could push firms towards expanding output by raising investment and productivity instead of relying on cheap labour. However, any gains in productivity may not materialise quickly enough to prevent central banks from reacting to the pick-up in wage growth. In view of the wider interest, we have also made this Global Economics Focus available to clients of our Long Run Service.

2 December 2021

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PMIs show some signs of supply shortages easing

November’s manufacturing PMIs suggest that global industrial production has continued to expand, albeit at a slower pace than earlier this year. There are tentative signs that supply disruptions may be easing, but from a very strained starting point, and virus developments may cause a renewed deterioration soon.

1 December 2021

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Renewed restrictions: inflationary or disinflationary?

If Omicron turns out to be malign enough to prompt tighter restrictions, we suspect that the net result would initially be for inflation to be lower than otherwise. But by worsening product and potentially labour shortages, restrictions on household activity could end up keeping inflation above targets for longer.

1 December 2021

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Global Trade Monitor

Recovery in world trade continues, for now

April’s data revealed that world trade flows have enjoyed virtually interrupted growth for 12 months now, with world trade remaining well above its pre-virus level. But between the quintupling of shipping costs over the past year, supply disruptions, and a potential cooldown in the demand for traded goods as economies re-open, there is no shortage of impediments to a continued robust recovery.

25 June 2021

Global Economics Update

Reflationary recovery races on

Inflation indicators in the flash PMIs for June reached new record highs and supplier delivery times lengthened still further. However, outside the US at least, there are few signs that goods shortages and higher costs have held back the recovery in manufacturing output. More generally, the PMIs suggest that lockdown easing continues to propel recoveries in the US and Europe, where restrictions have eased.

23 June 2021

Global Economics Update

How much of the rise in inflation is due to ‘base effects’?

Much of the rise in inflation in major advanced economies from February to May has reflected the fact that prices fell in the same period a year ago. That said, depending on how you measure it, around half of the jump in inflation in the US and UK over the past three months has reflected a ‘genuine’ pick-up in For the most part, base effects are unlikely to be a significant driver of inflation in the year ahead.

18 June 2021
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