The top risks to the global economic recovery are shifting from pandemic-driven bankruptcies to potential mistakes policymakers can make in managing rising inflation and its impact on financial markets of emerging economies, according to the World Economic Forum.
The question on the minds of economists and policymakers is whether inflation, wage increases and greater global fragmentation are “true trend reversals or will dissipate as the pandemic ebbs”, the Switzerland-based WEF said in a report.
The world economy has bounced back strongly from the pandemic that last year drove it into its worst recessions since the 1930s. The severe economic disruption stoked worries of financial markets collapse, debt defaults and corporate bankruptcies, prompting governments and central banks around the globe to pour $25 trillion in fiscal and monetary support.
The recovery, though uneven across developed and developing words, has also stoked inflation amid rising commodities prices and supply bottlenecks. US inflation advanced to 6.2 per cent in October, the highest level in more than three decades. It is significantly higher compared to the 0 per cent that the Federal Reserve is using as the benchmark interest rate.
However, despite price surges across multiple key markets, inflation expectations in advanced economies are stable at around 2 per cent “due to the reputation independent central banks have built up for sticking to their mandate of price stability”, the WEF said in its November Chief Economists Outlook, which surveyed economists from both the public and private sector organisations.
“While inflation expectations have thus far remained well within their historic ranges, labour market developments, especially in the US, have surprised by sharp wage increases amid a lack of labour supply (ie low participation),” Christian Keller, head of research at British lender Barclays, said in the report.
“It will require more time to tell whether these are still temporary deviations due to Covid or may reflect lasting behavioural changes.”
Central banks are now under growing pressure to change their monetary stance and raise interest rates to curb inflation, however, such policy action carries a high risk of “triggering capital outflows, particularly in markets where macroeconomic fundamentals are unsound”, the WEF said.
Emerging economies, some of them at early stages of recovery from the pandemic and still facing risk of Covid-19 infections rise, are also facing increased pressure to invest in mitigating climate risks and achieve their sustainable development goals.
“There is potential for higher price pressure for longer,” Eirik Waerness, chief economist at Norway’s energy company Equinor, said.
“It is fair to say that the current situation in European and Asian electricity and gas markets is a vivid illustration of the energy trilemma of affordability, decarbonisation and security of supply.”
On balance, economists polled by the WEF, expect current levels of inflation to be a short-term phenomenon over the next one to two years, though energy and housing prices might remain on an upwards trend for longer.
The pandemic, combined with longer-term developments such as the green transition, on the other hand, is strengthening bargaining power for some workers and an increase in wages.
“This wage growth is seen as a welcome short-to-medium-term phenomenon but may weaken in the longer term as automation and global competition for local jobs again accelerate,” the WEF said.
The specs: 2018 Opel Mokka X
Price, as tested: Dh84,000
Engine: 1.4L, four-cylinder turbo
Transmission: Six-speed auto
Power: 142hp at 4,900rpm
Torque: 200Nm at 1,850rpm
Fuel economy, combined: 6.5L / 100km
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Kat Wightman's tips on how to create zones in large spaces
- Area carpets or rugs are the easiest way to segregate spaces while also unifying them.
- Lighting can help define areas. Try pendant lighting over dining tables, and side and floor lamps in living areas.
- Keep the colour palette the same in a room, but combine different tones and textures in different zone. A common accent colour dotted throughout the space brings it together.
- Don’t be afraid to use furniture to break up the space. For example, if you have a sofa placed in the middle of the room, a console unit behind it will give good punctuation.
- Use a considered collection of prints and artworks that work together to form a cohesive journey.
EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
You Were Never Really Here
Director: Lynne Ramsay
Starring: Joaquim Phoenix, Ekaterina Samsonov
Four stars
Killing of Qassem Suleimani
Global Fungi Facts
• Scientists estimate there could be as many as 3 million fungal species globally
• Only about 160,000 have been officially described leaving around 90% undiscovered
• Fungi account for roughly 90% of Earth's unknown biodiversity
• Forest fungi help tackle climate change, absorbing up to 36% of global fossil fuel emissions annually and storing around 5 billion tonnes of carbon in the planet's topsoil
Company%20profile
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PROFILE OF SWVL
Started: April 2017
Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh
Based: Cairo, Egypt
Sector: transport
Size: 450 employees
Investment: approximately $80 million
Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani
More from Rashmee Roshan Lall
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Common%20symptoms%20of%20MS
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
