How much would school closures cost the economy?

School closures are one of the main ways in which government attempts to manage the spread of the coronavirus will dent economic activity. While parents can work around the closures to some extent, there is nonetheless likely to be a fairly sizeable hit to output via this channel in the affected countries.
Vicky Redwood Senior Economic Adviser
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Global Economics Update

What an Evergrande collapse would mean for the world

We think that the ‘China’s Lehman moment’ narrative is wide of the mark. On its own, a managed default or even messy collapse of Evergrande would have little global impact beyond some market turbulence. Even if it were the first of many property developers to go bust in China, we suspect it would take a policy misstep for this to cause a sharp slowdown in its economy. In a hard-landing scenario, several emerging markets are vulnerable. But in general, the global impact of swings in Chinese demand is often overstated.

16 September 2021

Global Economics Update

Sky-high shipping costs pose upside risk to inflation

Our inflation forecasts already incorporate some passthrough of pipeline pressures including higher shipping costs to consumer prices. But given that maritime shipping costs have never surged anywhere near as much as they have done during the past year, the full extent of the passthrough is difficult to predict. Our sense is that inflation risks staying higher for longer than we and others anticipate in the coming year.

14 September 2021

Global Economics Update

The effects of supply shortages

Supply shortages may continue to limit growth and put upward pressure on prices for several months to come before a new wave of COVID infections is brought under control, economies reopen, and spending patterns normalise. Shortages have related to both goods and labour, but in this Update we will focus on goods, answering six key questions about the shortages and their potential implications.

9 September 2021

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Long Run Focus

Will we start working less?

The downward trend in average working hours in advanced economies has slowed or stalled in the past few decades. Yet there are reasons to think that the decline will resume, at least in some sectors and some countries. Other things equal, fewer hours worked would dent GDP. However, a reduction in working hours could boost participation and/or make workers more productive. As for the impact on the composition of economies, a rise in leisure time could give a boost to recreational sectors.

13 May 2021

Long Run Update

Will demographic changes boost inflationary pressures?

The rapid growth of the global labour supply in the past few decades looks set to give way to a period of much weaker growth. Some argue that this will reverse the decline in inflation seen in recent years as the bargaining power of labour rises and an ageing population boosts the number of consumers relative to producers. But there is a lot of uncertainty about how demographic changes affect inflation. Even if the net impact is to push inflation up moderately, other factors such as the attitudes of policymakers towards inflation are likely to play a far bigger role in determining whether we see higher inflation in the long run.

24 March 2021

Long Run Update

The outlook for deglobalisation

We argued some time ago that globalisation had peaked and a period of deglobalisation might even lie ahead. It is now becoming clearer what to expect – namely a type of regionalism driven by the emergence of separate US-led and China-led spheres. While this decoupling began with trade, it will increasingly spread into technology, market access and financial ties. This will put a modest dent in productivity growth at a global level, but China stands to come off worse than the West given its inefficient state-led model.

16 March 2021
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