“Excess” household savings could yet boost spending

With household saving rates still elevated in most developed economies, “excess savings” have continued to rise. If people were to run down these savings, this would breathe new life into consumer recoveries.
Vicky Redwood Senior Economic Adviser
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Global Economics Update

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Coronavirus fears have resurged, with some restrictions being reimposed in Europe. So far, the hit to activity seems fairly modest, but it will be enough to see economic recoveries in the euro-zone and parts of emerging Europe slow in Q4. And restrictions might be tightened further in some economies if an Omicron wave dials up the pressure on health services, implying bigger risks to GDP early next year.

8 December 2021

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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.

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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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COP26 unlikely to alter economic outlook

The UN’s annual climate change conference, COP26, has the potential to be an important milestone but it is just one step along the path required to limit global warming. Accordingly, it will not on its own stop climate change from clouding the long-run economic outlook for many emerging markets in particular.

2 November 2021

Global Economics Update

Has the pandemic permanently reduced the workforce?

The pandemic is still depressing the size of the labour force in many developed countries. This probably reflects a mixture of temporary and permanent factors, so some of it may yet be reversed. But even if the bulk of the reduction in the labour force persists, this does not alter the big picture that the overall lasting damage to economies’ supply capacity has been limited considering the scale of the downturn.

19 October 2021

Global Economics Update

Economies after COVID: one year on

It is a year since we published our “Economies after COVID” series, so now seems like a good time to pause and take stock of how our predictions about the legacy of the pandemic are shaping up. There is a still a long way to go until the pandemic’s full effects can be judged, not least because the pandemic is not even over yet; only a few countries are at the point of transitioning to treating COVID-19 as an endemic disease. But, so far, it is looking like we were right to judge that the legacy of the pandemic would be found in broader issues like consumer behaviour and globalisation, rather than narrow measures of GDP.

8 October 2021
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